Losing a spouse is an emotionally traumatic experience that can quickly become financially traumatic as well. Depending on how much debt your husband owed and your state's laws, your husband's death may leave you owing a considerable amount of money to creditors. While consumers generally don't inherit debt the same way they would inherit wealth, in some cases, a deceased individual's creditors can pursue his surviving spouse for payment.
Any debt for which you were legally liable prior to your husband's death remains your responsibility. For example, if you have a mortgage loan in both your name and your late husband's name, his death does not absolve you of your payment obligations. According to the Federal Trade Commission, an exception to this rule occurs if you are authorized to use your husband's credit card yet do not share a joint account. Authorized credit card users can make purchases against the account, but the primary account holder – not the authorized user – is responsible for payment.
Settling the Estate
When an individual dies, his estate goes into probate. An estate consists of all property the deceased owned. The probate court then distributes the proceeds from the estate to the deceased's creditors and heirs. Your late husband's creditors will file claims against his estate. The National Endowment for Financial Education notes that you and any other heirs receive your inheritance after the probate period ends. Depending on the size of the estate and your state's probate laws, settling the estate may take anywhere from several weeks to several months.
State laws differ regarding debt liability after a spouse's death, but a surviving spouse is generally not responsible for any non-joint debt the deceased owed unless she lives in a community property state. At the time of publication, there are nine community property states. Community property law dictates that all assets you or your spouse acquires during the marriage belong to both of you equally. Because you share the assets equally, you also share the debt. You are not responsible for paying off any individual debts your late husband incurred prior to your marriage.
If your spouse's debts exceeded his assets, his estate is left insolvent and cannot pay off all of his debts. Should this occur, his creditors will likely contact you requesting payment – even if you are not legally responsible for the debt. While debt collectors can request that you pay off your late spouse's accounts, the Fair Debt Collection Practices Act bars them from threatening you with legal action or credit damage if you are not legally responsible for payment.
References & Resources
- Federal Trade Commission: Facts for Consumers
- National Endowment for Financial Education: Settling the Estate
- California Courts – 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/p.8)
- AARP: Debts After Death
- Financial Directions: A To-Do List for Settling an Estate
- Jupiterimages/liquidlibrary/Getty Images