A spouse’s death leaves you feeling overwhelmed with grief and confusion. In addition to bearing the emotional burden, you must manage their property, assets, and debts. The question of your responsibility for the debt they leave behind can be challenging, so it’s vital to understand your rights and responsibilities.
What Happens to Your Spouse’s Debts After They Die
When someone dies, their will serves as a roadmap for what happens to their belongings. If they’re legally married and die without a will, everything they own automatically goes to their spouse. But what happens to their debts?
You must pay all your spouse’s debts secured by property (mortgages and car loans; if you don’t, the lenders can foreclose or repossess the property. You’ll also need to pay any joint debts.
As to any debts held solely in your spouse’s name, state laws control your liability. New York, for example, is an equitable distribution state. Liability for payment of debts is governed entirely by contract; if you didn’t sign the contract or promissory note, you’re not responsible for the debt. When someone dies, creditors get paid only from the dead person’s estate unless there were any cosigners or guarantors.
California, a community property state, treats the problem slightly differently.
California’s Rule on Liability for Your Spouse’s Debts
Under California’s community property laws, the surviving spouse is usually liable for “community debts” taken out in the deceased spouse’s name. These are debts incurred during the marriage to benefit the marital “community.”
Suppose your spouse took out a private student loan, a personal loan, a credit card, or any other obligation before you married. In that case, it’s not a community debt.
However, credit creditors that hold community debt are limited in how they can collect that debt. Though you’re personally liable for the community debt, that liability is limited to the following:
- half of your portion of the community property; PLUS
- half of your deceased spouse’s portion of the community property; PLUS
- the value of your spouse’s separate property that doesn’t pass through probate.
Your Liability for Your Spouse’s Premarital Debts
Creditors can hold you personally liable for your deceased spouse’s separate debts only to the extent of your half-interest in any community property. Only if there was significant community property will your spouse’s creditors be able to get something from you.
Because the community ends when your spouse dies, creditors can’t collect against any income you earn after your spouse dies or assets you purchase with that income.
How to Avoid Liability Entirely
If you and your spouse sign a prenuptial or similar agreement, their creditors can’t touch you.
Though California law presumes all assets and debts acquired during the marriage are community property, you and your spouse can agree otherwise. For example, you and your spouse can decide not to have any shared community property or that only specific belongings will be communal assets. At the same time, the remaining items are separate properties of each of you.
You and your spouse can execute a prenuptial agreement to cover the entire marriage or specific situations, such as when one spouse starts a business. You may also sign a postnuptial agreement, which you execute after the wedding.
The Shorter Statute of Limitations Can Be Your Friend
In contrast to California’s four-year statute of limitations, the law provides creditors only one year after your spouse’s death to sue you for their debts.
California courts have held that this one-year statute of limitations applies to a spouse’s debts from credit cards, other obligations, and medical expenses of their final illness.
Considering how slowly creditors and collectors move accounts through their systems, this shortened timeframe is a primary reason many can escape liability for their deceased spouse’s debts.
If Your Spouse Dies, Here’s What to do About Their Debts
It is essential to communicate with your deceased spouse’s creditors and collectors as soon as possible. Doing so can help limit your liability and reduce the chances of any errors or misunderstandings. In addition, by contacting a creditor or collector quickly, you can begin the process of understanding which obligations are yours to pay and which are not.
You should be prepared to provide the creditor or collector with the following:
- your spouse’s name, date of death, Social Security number, and any other identifying information related to the debt;
- a certified copy of your marriage certificate;
- a certified copy of the death certificate to verify your spouse’s death; and
- a copy of any prenuptial or postnuptial agreements.
Get a confirmation that the account has been closed and review your spouse’s credit reports 90 days later to be sure they’re accurate.
Don’t Let Grief Cloud Your Judgment
Dealing with debt is a challenge under the best circumstances, and the stress is more significant when you’re mourning. Understanding your legal rights can ease some of that burden. Knowing your responsibilities can help you resolve your spouse’s remaining debts so that you can move forward with peace of mind. If your financial situation doesn’t allow you to manage the debts, get in touch with me to set up a Planning Session. Working together, we’ll put together a plan to get you out of debt once and for all.
ABOUT THE AUTHOR
Since I became a lawyer in 1995, I’ve represented people with problems involving student loans, consumer debts, mortgage foreclosures, collection abuse, and credit reports. Instead of gatekeeping my knowledge, I make as much of it available at no cost as possible on this site and my other social channels. I wrote every word on this site.
I’ve helped thousands of federal and private student loan borrowers lower their payments, negotiate settlements, get out of default and qualify for loan forgiveness programs. My practice includes defending student loan lawsuits filed by companies such as Navient and National Collegiate Student Loan Trust. In addition, I’ve represented thousands of individuals and families in Chapter 7 and Chapter 13 bankruptcy cases. I currently focus my law practice solely on student loan issues.
I played a central role in developing the Student Loan Law Workshop, where I helped to train over 350 lawyers on how to help people with student loan problems. I’ve spoken at events held by the National Association of Consumer Bankruptcy Attorneys, National Association of Consumer Advocates, and bar associations around the country. National news outlets regularly look to me for my insights on student loans and consumer debt issues.
I’m licensed to practice law in New York and California and advise federal student loan borrowers nationwide.