If I Die Will My Spouse Be Responsible For My Debt?
Full Question:
Answer:
A deceased's debts should be paid with the property in their estate (the property left at their death). It is possible that they could attach real property if they get a judgment against you that remains unpaid and your name is on the title. If the property was sold, your share of the equity in the proceeds could be used to pay creditors. Courts have held that property owned by husband and wife as tenants by the entireties may not be sold to satisfy the debt of only one spouse However, property held as joint tenants who are not tenants by the entireties may be sold to satisfy the a sole debt of one owner, up to the amount of that debtor's equity in the property. The non-debtor owner will receive the balance of his share of equity in the property from the sale.
Generally, a spouse is not liable for the debts of the other as long as it is an individual account, the spouse running up the debt is not an authorized user, surety, guarantor, or cosignor, and the couple does not live in a community property state. However, even in a community property state the assets of the spouse not running up the debt could be at risk. For example, in cases involving, among others, bankruptcy, divorce, or other litigation, creditors may go after assets held jointly by the debtor and non-debtor spouse such as a bank account in both their names.
Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will. Be advised that when a spouse inherits property that is collateral for a debt -- for example, a car that is not paid for or a house with a mortgage -- the debt comes with the property. If there is insufficient money or assets to pay all creditors, then the estate must be divided up as equally as possible, with secured creditors receiving priority. This means that if the deceased spouse died with little or no money in their accounts and didn't own a home, unsecured debt, such as credit card debt will not be paid to the creditors.
