When a spouse dies with an unpaid debt, it’s generally paid with the money or property left in the estate, although there are some exceptions.
When you lose a spouse, there are many details to consider, including what happens to debt after your spouse dies.
You know you may stand to inherit his/her assets as outlined in their final wishes, but debt isn’t something anyone thinks about until it is time to deal with it.
KEY TAKEAWAYS:
- Most people are not responsible for their spouse’s debt when they die, but there are exceptions to the rule.
- If there are debts your spouse left behind that are not your responsibility, they become the responsibility of the estate.
- If your spouse doesn’t have an estate or a large enough one to cover the debts and they don’t become your responsibility, they remain unpaid.
Must You Pay Your Spouse’s Debt After They Die?
Typically, you are not responsible for your spouse’s debt when they die, but there are exceptions to the rule. This means you aren’t responsible for the debts with your own assets, but the estate may be responsible.
If your spouse had an estate, the debts should be repaid from the estate. However, a spouse cannot be held legally responsible themselves.
Reasons You Might Be Responsible For Your Spouse’s Debt After They Die
A few exceptions exist when determining if you are responsible for debt after your spouse dies.
You were a Co-signer
If you co-signed on the debt, you took legal responsibility while your spouse was alive. Since you are the only survivor, you become legally responsible for the debt because you signed the loan agreement.
When you took on the debt, you agreed to take equal responsibility for the debt, no matter the circumstances. However, you are not responsible for the debt if your spouse had credit cards that you are an authorized user on (not a co-signer).
Your State Laws Require It
Some state laws require spouses of the deceased to pay their debts. In most cases, this pertains only to medical debt but check with your state laws to determine what counts.
You Are The Executor
If you are the executor of your spouse’s estate, your state law may require that you pay the debts from any jointly owned assets.
You Live In A Community Property State
There are nine community property states. In these states, all assets are owned 50/50, and a surviving spouse is required to use the asset to repay any of the deceased spouse’s debts.
This applies even to debts that only one spouse incurred. In community states, all debts belong to both partners.
What About The Debts You Aren’t Responsible For?
If there are debts your spouse left behind that are not your responsibility, they become the responsibility of the estate.
This means instead of the creditors coming after you for payment, they will go to the estate.
The debts get paid in order of priority and almost always come before any money gets disbursed to beneficiaries.
If there aren’t cash assets available, the creditors may require the executor to sell the estate’s assets to pay the debts.
However, some exceptions include: life insurance proceeds, retirement accounts, and employer-sponsored plans.
What If There Isn’t An Estate?
If your spouse doesn’t have an estate or a large enough one to cover the debts and they don’t become your responsibility, they remain unpaid.
Which debts does this affect and how? It depends on your state and the size of your spouse’s estate.
Can Debt Collectors Call You About Your Deceased Spouse’s Debt?
You’d hope that debt collectors wouldn’t be able to call you about your spouse’s debts, but they can.
The key is to understand your rights. First, determine if you live in a community property state. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you live in one of those states, you can discuss your options with the debt collector, as the state law requires you to pay the debts. You may not be responsible if you don’t live in one of these states and aren’t a co-signer or joint account holder.
Even if you are, according to the Fair Debt Collections Practices Act, you have the right to ask the debt collector not to call you.
You can provide a copy of the death certificate and, in writing, request that they stop contacting you. You can file a complaint with the Federal Trade Commission if they violate this right.
Preparing To Handle Spouse’s Debt Before They Die
A good part of estate planning is determining how to handle the debts incurred. Discuss the debts each partner has and what legal responsibility anyone else may have for the debt upon that person’s passing.
You can set up life insurance or other financial protections to protect your loved ones and the estate upon your passing.
You may also consider options, such as debt consolidation or creating a debt payoff plan that helps reduce the debt and keeps more money in the estate by saving on interest charges.
Getting Help To Determine Responsibility
If you’re wondering what happens to debt after a spouse dies, and it’s not clear based on where you live or how you owned the debt, you have the right to get information in writing.
When a debt collector or the original creditor contacts you for the first time, you can request details of the debt in writing. They are legally responsible for providing it.
You can also contact a lawyer to help determine what you owe. A lawyer can help you decipher the laws and what you owe during this trying time.
Final Thoughts On What Happens To Debt After A Spouse Dies
Knowing what happens to debt after a spouse dies is important. If there is debt when your spouse dies, it’s important to know your legal rights and to have support.
Debt collectors can call you but cannot hassle you or make you uncomfortable. You have the right to ask them not to call you and consult a lawyer to determine which debts you must handle.
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