Inheriting Debt After a Death

By Ciele Edwards

When you die, you can no longer continue paying your creditors. Unfortunately, your debt doesn't die when you do. Your creditors will work to recover your unpaid debts after your death by filing payment claims against your estate. Depending on the type of debts you left behind and the laws in your state, your loved ones may be financially responsible for paying off your creditors after your death.

Inheriting Debt

Debts you leave unpaid do not generally become your children's responsibility after your death. Although it is not uncommon for creditors to demand payment from family members after a debtor's death, your children have no legal obligation to repay your creditors. The exception to this rule occurs if you and your child shared a joint debt, such as a joint credit account, or your child co-signed with you for a loan. In each of these cases the debt belongs to both you and your child and, upon your death, your child becomes solely responsible for repaying that debt.

Paying Creditors

Creditors you owe have the right to file payment claims with the probate court responsible for distributing your estate. The executor of your will must use the estate's proceeds to pay as much of your outstanding debt as as your assets will allow. Your heirs receive any funds left over after the executor pays off your creditors. If you do not have a will, a personal representative serves the same purpose as an executor and distributes the proceeds of your estate accordingly. Although your children are not generally responsible for your debts, creditor claims reduce the amount of inheritance each child receives from your estate.

Protect your loved ones. Start My Estate Plan

Joint Debts

Like your children, your surviving spouse does not directly inherit your unpaid debts, but she may be liable for them just the same. Spouses often share joint accounts, such as a joint mortgage or credit card account. Whenever two people share a joint debt, both are equally responsible for payment. That responsibility does not change when one spouse dies. Thus, any joint accounts you share with your spouse become your spouse's full financial obligation should you die before paying off the debt

Community Property States

One factor that influences whether your debt passes on to a loved one is whether you live in a state that recognizes community property law. If you live in a community property state, such as California, you and your spouse share all of your debts and assets equally – regardless of which of you actually acquired the asset or incurred the debt. In community property states, your spouse is liable for your debts after you die. This is true even if those debts were not part of a joint account. An exception to the community property rule exists for any debts you acquired prior to your marriage. Because you did not incur these debts during your marriage, they do not fall under community property laws and your spouse is not legally responsible for their payment.

Protect your loved ones. Start My Estate Plan
Do You Inherit the Past Debts of Your Husband?



Related articles

Does an Executor Have to Assume Unpaid Debt in Michigan?

The executor of an estate has a great deal of responsibility in Michigan and elsewhere. Personally assuming the decedent's unpaid debts usually isn't required, however. If you ask someone to serve in this capacity and name her as executor of your estate in your will, she has some say over who gets paid and who does not, but she would not have to reach into her own pocket to pay your debts, except in certain rare circumstances.

What Happens if a Deceased Family Member's Estate Is Worth Nothing?

When a loved one dies, the assets he leaves behind constitute his estate. The probate court assumes responsibility for your deceased loved one's estate and uses the money to pay off creditor claims before turning the remainder over to his beneficiaries. If your deceased loved one did not leave behind any assets or if his debts exceed the value of his assets, the estate is classified as “insolvent.”

Dying Without a Will in Maine

While it can be a simple matter to create a will, many people die without having one. Sometimes, the process of creating a will can seem too complicated or perhaps the deceased person simply didn’t think about creating a will. When there is no will, state law steps in to determine who inherits the property of the deceased person.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Assuming a Debt in Divorce

Though many couples focus their efforts in a divorce on who gets a greater share of the property, the way your debts ...

Who Inherits if There's No Will in Connecticut?

Your wishes for property distribution after you die in Connecticut may not be honored if you don't leave a valid will ...

What Is an Insolvent Estate?

It's not unusual for someone to have more debts than assets. If this is the case when you die, your estate is ...

Do I Need to Add My Wife to My Bankruptcy?

When people marry, they tend to commingle assets, debts and expenses. They open joint bank accounts and take out joint ...

Browse by category
Ready to Begin? GET STARTED