After losing a loved one, the last thing you want to focus on is your finances. Unfortunately, the death of a spouse can spawn new and unwelcome financial obligations that you cannot ignore. Depending on the laws in your state and the type of accounts your late spouse carried, you could end up holding the bag for his unpaid debts.
If you're like most couples, you and your spouse share several joint accounts, such as a joint mortgage loan or joint credit cards. The convenience of joint accounts is undeniable, but the accounts you share now can become a financial headache later should one of you pass away unexpectedly. Sharing liability for a joint debt doesn't mean that you are only responsible for 50 percent of the unpaid balance. You and your spouse are both on the hook for the full amount you owe. If one of you dies, the surviving spouse is then liable for the total debt.
With few exceptions, you generally aren't responsible for your spouse's individual debts. If your spouse passes away, his creditors must file probate claims with the court handling his estate. Although you aren't directly liable for payment, the money the probate court uses to pay off your spouse's debts is money that would otherwise go to your spouse's heirs -- in other words, you. Thus, while you aren't legally responsible for your spouse's individual accounts, you'll end up paying them indirectly via your reduced inheritance. Because all joint debts the two of you shared fall solely to you after your spouse's death, they are not included in the probate process.
Community Property Law
The exception to the rule regarding spousal liability for individual debts comes into play in community property states. Community property states consider all debts and assets acquired during the marriage equal property of the marriage. This means any debts your spouse incurred during your marriage are just as much your responsibility as his. This is true even if you were not aware of the debts until his death. You are not, however, responsible for debts your spouse brought into the marriage. For example, you aren't on the hook for an unpaid student loan that your spouse took out years before the two of you even met.
Even though you aren't liable for your spouse's individual debts, you can pay them off if you wish. Depending on the number of assets your spouse left behind, there may not be enough money in his estate to pay off all of his debts. Unpaid creditors often turn to the surviving family members of the deceased for payment. Grieving is hard enough without also having to fend off payment demands for a debt you aren't even liable for. Unless you live in a community property state, your deceased spouse's creditors do not have the right to sue you, report the account to the credit bureaus or harass you for payment. If your spouse's creditors so much as threaten to do any of these things, you can file a lawsuit of your own and legally force the creditor leave you in peace.
- Bankrate.com: At Death, Who Inherits Credit Card Debt?
- Clearpoint Credit Counseling Solutions: Debt After Death of a Spouse
- The Judicial Branch of California: Property and Debt
- The New York Times: You're Dead? That Won't Stop the Debt Collector
- Federal Trade Commission: The Fair Debt Collection Practices Act (Section 807,813)
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.