After the loss of a spouse, before doing anything, take a second to catch your breath and make sure you understand your rights and responsibilities regarding debt collection. You may not be liable for some debts, including even certain types of credit card charges, which may be forgiven at death. However, other debts can linger much longer such as a mortgage. When a spouse dies who pays the debts?
Kiplinger’s recent article entitled “Am I Responsible for Paying Off My Deceased Husband’s Debt?” says you should understand that you’re typically not personally responsible for paying off your spouse’s debts because any loans would normally be paid off by his estate. This includes credit card debt, student loans, car loans, mortgages and business loans.
When a spouse passes away owing a debt, the debt doesn’t immediately disappear. Instead, during probate administration, the estate is liable for paying any outstanding debts, and the personal representative, executor, or administrator will pay debts owed from the money in the estate. It’s not paid from the surviving spouse’s savings. However, if the surviving spouse inherits certain assets from the deceased spouse through beneficiary designations or joint account ownership, and the estate assets are not enough to satisfy the creditors, they may try to make a claim against those assets that pass directly to the surviving spouse outside of the probate estate.
A surviving spouse may also be responsible for certain types of debts. For example, if the debt is jointly owned or he or she has co-signed a loan, the surviving spouse is obligated to continue to pay this debt. There are also states that require a surviving spouse to pay off any medical bills the deceased incurred before their death.
You should be familiar with the laws of your state, so you know your liability on all debts. This is because some community property states say you’re responsible for the debt, even if it’s not in your name. Community property laws make both spouses equally liable for debts incurred after the marriage has taken place. There are currently nine community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
If the surviving spouse is a joint account holder on a credit card, he or she would need to continue to pay off the credit card because both spouses are both considered owners of the account and share equally in the ownership of any charges on the card.
Unfortunately, some debt collectors are inappropriately aggressive. Therefore, if a debt collector says you’re responsible for the account balance, but you think you’re not, ask for evidence. Speak with an experienced estate planning or probate attorney to understand in what situations you are obligated to pay and when you’re not.
Reference: Kiplinger (Nov. 28, 2021) “Am I Responsible for Paying Off My Deceased Husband’s Debt?”