If a Family Member Dies, Which Debts Will You Be Responsible For?
One thing to know about debt is that it doesn’t go away — even after the death of the person holding it. When someone dies, their debts and assets typically pass to their estate, according to the Consumer Financial Protection Bureau (CFPB). The estate is responsible for paying any unpaid debts.
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If there is no money or property left, then under most circumstances the debt will not be paid. As a general rule, no one else — including family members — is required to pay the debts of someone who died, according to the CFPB. That’s not always the case, however.
In some cases, surviving family members might be responsible for paying certain debts of the deceased. This largely depends on the type of debt and where you live. For example, shared debts might fall on the shoulders of survivors in the following scenarios:
You were joint account owners.
You borrowed the money as a co-signer.
You are a surviving spouse and live in a community property state where spouses share responsibility for certain marital debts.
Your state has “necessaries statutes” that make parents and spouses responsible for certain necessary costs such as healthcare.
In community property states, spouses are “considered joint owners of nearly all assets and debts acquired in marriage,” according to a 2022 blog on the Experian website. The vast majority of states use a different “common law” model that allows spouses to own property individually. The type of law your state follows dictates how property is divided upon divorce or death.
Experian lists only nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Three states — California, Nevada and Washington — also have community property law for domestic partnerships that might not involve marriage.
Some states also require medical debt to be paid for by the surviving spouse, according to the Trust & Will website. In addition, you might be responsible for paying taxes owed by the decedent if you are the surviving spouse and you file jointly for the year your spouse died. As Trust & Will noted, surviving spouses can take over tax duties if they don’t want them to be handled by the estate administrator or other representative. But taxes will need to be filed and paid.
When it comes to other debt, such as credit cards, you might not be responsible for paying it even if you were an authorized user. But don’t be surprised if you are contacted by a debt collector. The CFPB noted that debt collectors can contact surviving spouses and mention the debt, though that doesn’t mean that you’re responsible for paying it. If you are not responsible for the debt, debt collectors aren’t allowed to say that you are.
Other types of unsecured debt, such as student and personal loans, are typically handled by the estate if any money is left over, Business Insider reported. When someone dies owing money on federal student loans, that debt will be discharged. However, private student loan lenders might require the debt to be repaid, so if you co-signed the loan and the estate can’t pay it, you might be responsible for paying it.
Because sorting through debt following the death of a loved one can be a complicated process, the CFPB recommends seeking help from experts who might charge no fee or a very low fee. For example, you might qualify for free legal aid based on your income. Contact your local bar association or find a legal aid office in your area.
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Another resource is the Eldercare Locator, a public service of the U.S. Administration on Aging that connects seniors and their caregivers with local support resources, including free legal aid for many older adults.
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Michael Keenan contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: If a Family Member Dies, Which Debts Will You Be Responsible For?
