Inheriting Spouse's Debts
By Gary Foreman
My question is about
each married individuals responsibilities in case of the death of the other. I
will use my husband and I as an example. We have separate bank accounts,
separate loans, separate credit cards except for our heating utility company.
Our marriage is the second for each of us. While I have established a very good
credit history, my current husband has bad credit. Will I be responsible for
paying off his debts if he should die first? I have NEVER used his credit cards
and my name is not on any accounts of his. Our cars are also only listed in his
name or mine.
While none of us like to think about it, we should all be prepared for our own
deaths and those near to us. Nancy is very smart to ask these questions now
while she can still take any corrective action that's necessary.
There are two ways that you can find yourself being responsible for another
person's credit card debts. The first is if you agree to be responsible for
debts incurred on the card. You'll need to sign an application for this to
happen. Generally you'll be the owner/co-owner of the account or have co-signed
on the account. But, you'll know if you've obligated yourself this way (unless
you didn't bother to read what you were signing). In Nancy's case, it appears
that she hasn't done that.
The second way that you could be responsible for credit card debts is less
obvious. Let's take Nancy's situation. Suppose that she is not personally
responsible for the card. Only her husband (from now on known as "Hubby") is. So
if Hubby should die, the credit card company must look to his assets for
payment. What does he own? Anything that's titled in his name (like the car that
Nancy mentioned) is fair game for creditors. So if Hubby is not on the title to
Nancy's car, the car should be safe from his creditors. So far, so good for
Where it gets tricky is with anything that's owned in a joint account. In some
joint accounts you only own your portion of the account (i.e. half of an account
with two joint owners or 1/3 of an account with 3 owners). But in most, it's
assumed that either party owns all of the account. In other words, either Nancy
or Hubby could write a check for the entire balance of a joint checking account.
In this case the credit card company would say that Hubby owned all of the
checking account and claim the entire balance to pay off Hubby's credit card
bill. And, they'd get the money.
Nancy has been wise to avoid joint accounts. She's gone a long way to avoiding
debts that aren't her's. But there's still one more hurdle she'll need to
There's a patchwork of state laws that must be considered. For instance, your
state may have a law that says that it's assumed that half the property acquired
during a marriage belongs to each partner. That could mean that half of your
property (including savings accounts, etc.) is available to pay your spouse's
debts. Only research in your state laws will alert you to all the dangers. In
some cases a lawyer will be required.
Whether Nancy needs to talk with one will depend on her circumstances. She can
do the basic things herself (and for the most part she already has). Keep
separate credit card accounts. Don't co-sign or guarantee any loans. Keep your
If either Nancy or Hubby has significant assets (and, you'll need to decide what
'significant' means to you), it might be wise to see an attorney. If you come in
with the facts and specific questions it shouldn't be too expensive to find out
if you have any exposure to debts that you didn't create.
As a general rule you don't become responsible for someone's debts because
you're related to them. But, the exceptions to this rule can be really
expensive! So find out before it's too late.
Keep on Stretching those Dollars!
Gary Foreman is the editor of The Dollar Stretcher.com
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