Are spouses held responsible for debts?

Key takeaways about spousal debt

• In most cases, after a spouse’s death, the estate pays the debts. If it cannot, neither the spouse nor other relatives are expected to pay out of pocket.

• Co-owned debt such as a co-signed loan or joint credit card will now be your responsibility.

• In community property states, community assets need to be used to pay all debts incurred during the marriage.

• Jointly owned property can be claimed by creditors in some specific situations.

If you have recently experienced the loss of your spouse, you may be overwhelmed by all that is happening. The emotional trauma of your loss can be compounded by the many practical and logistical considerations, including financial issues. The last thing you want to deal with right now are debt collectors who come calling, but it is hard to know how to respond to them. So, the question is: Are you responsible for your spouse’s debts after they pass away?

The answer is generally no. Typically a person’s debts become the debts of their estate after their death. These are paid out by the executor during probate, using the assets the person left in their estate. If the assets cannot cover the debts, some creditors will get paid first and others will lose out, following an order of priority determined by state law and the courts. 

In most cases, no family member, including a spouse, is responsible for going into their own pockets to repay the debts that the estate could not cover. They do not inherit anything, as the estate’s assets are totally used up, but their own personal assets are protected from any creditors who didn’t get paid.                                                                         

There are some exceptions, however. A loan on which you were the co-signer defaults to your name and becomes your responsibility. This can include any debt that you signed with your spouse, whether it is an auto loan, business loan, a student loan, or a jointly owned credit card. If, however, you were only an authorized user on your spouse’s card, then that debt remains with the estate.

If you live in a community property state, you are the co-owner of all of the assets acquired by either you or your spouse during your marriage, and you retain your ownership when your spouse passes away. But you can also be held responsible for paying any debts acquired by your spouse during your marriage out of these assets. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states, and Alaska, South Dakota, and Tennessee have optional community property laws that married couples may opt into. If you live in one of these states, contact a lawyer to understand your obligations fully. 

If you owned property together with your spouse in a common arrangement known as joint tenancy with right of survivorship, the property becomes yours alone when your spouse passes away, without going through probate. However, in some states and situations the law may allow a creditor to make a claim against that property for the repayment of your loved one’s debt, even in places without community property laws.

How do I take over the mortgage on our home?

If you inherit a home from your spouse with a mortgage and intend to continue living there, you will in most cases be allowed to assume the loan entirely even if you were not a co-signer of the original mortgage.

Many loans feature a “due-on-sale” clause, which states that the entire loan must be paid in full upon transfer to a new owner. However, federal law prohibits lenders from enforcing this clause if the property is transferred to the person's spouse or children. In other words, as long as you continue making payments, you can assume the mortgage.

The Consumer Financial Protection Bureau has also issued a rule that says that any new owner of an inherited house must be treated as a borrower even if you have not officially assumed the loan. Therefore you get the same protections against foreclosure that your spouse had, and can, for example, apply for a loan modification. You may be required to officially assume the loan in order to do so, however.

You may also choose to refinance the loan rather than take it over directly, which will depend on your own credit and will create brand new loan terms.

What about medical debt?

Medical debt is a particularly complex area that differs from state to state. As costs of health care continue to rise, it can frequently be the largest single source of debt—and depending on your state and your situation, the law may require you to pay some of your spouse’s unpaid medical debts.

In a community property state, a spouse is liable for medical expenses; in other states, medical debt may be given priority for claims against jointly owned property. 

If your loved one was receiving Medicaid benefits, the state will reserve the right to seek repayment for these final expenses, and usually these become high priority payments for the estate. As you are the person’s spouse, Medicaid is not allowed to make its claim during your lifetime; however, once you pass away, it can legally claim the property from your own heirs.

For these reasons, we highly recommend speaking to an attorney if your spouse left significant medical debt. 

What assets are protected from creditors?

While a great many varieties of asset classes are able to be claimed by creditors, there are two major exceptions: life insurance policies and retirement savings. As long as certain guidelines are followed, these assets are generally protected and may usually be distributed to their beneficiaries regardless of other debts owed by the estate.

In addition, assets passed through specific kinds of irrevocable living trusts may be unavailable to creditors, as long as certain conditions are met, including that the assets were not placed in the trust for the purpose of avoiding these debts.

How are debt collection agents allowed to contact you?

The Fair Debt Collection Practices Act limits who debt collection agents may contact, how often, and what they are permitted to discuss. Debt collectors will frequently attempt to scare and intimidate you into paying a debt that you may not necessarily owe, so it is important to proceed slowly and deliberately when communicating with them. 

Collection agents are only allowed to contact you about debts that you owe, such as the bills for a joint credit card you had with your spouse. Otherwise, unless you are the executor or administrator of your spouse’s estate, they cannot contact you or any other relatives except to get the executor’s name, address, and phone number. 

You can stop a debt collector from contacting you further by sending a letter to the collections agency, stating you do not wish to be contacted again. We recommend making a personal copy and sending the original letter via certified mail with a return receipt, so you have proof of when they received it. Once this letter is received, the collector cannot contact you again except to say there will be no further contact, or that they are filing a lawsuit to reclaim the alleged debt. 

Note that sending this letter does not remove a responsibility to pay a debt. It only prevents them legally from harassing you with repeated intrusive calls. If a collector violates your request or continues operating in a way that seems unethical, invasive, or improper, you can report them to the Federal Trade Commission as well as the office of your state’s attorney general.

Debt can be a difficult topic, and one that feels particularly unwelcome during this challenging time. Rest assured, however, that almost all debts will be dealt with as part of settling your spouse’s estate, and that you do not have to worry about them in most cases. It is always wise to seek the advice of a qualified estates attorney or financial advisor if you have any concerns about your own liability for any debts your spouse may have left behind.

You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.