When someone dies with an unpaid debt, it's generally paid with the money or property left in the estate. If your spouse dies, you're generally not responsible for their debt, unless it's a shared debt, or you are responsible under state law.
Since California is a community property state, the law applies that the community estate shared between both individuals is liable for a debt incurred by either spouse during the marriage. All community property shared equally between husband and wife can be held liable for repaying the debts of one spouse.
Most states follow the same rules derived from common law for determining when one spouse may be liable for the debts of the other. Generally, one is only liable for their spouse's debts if the obligation is in both names. This is true both if one is a joint account holder or just a co-signer.
Debt in Community Property States
No matter whether both spouses agreed to the debts, or even whether both knew about them, both are equally responsible to cover them.
You are generally not responsible for your spouse's credit card debt unless you are a co-signor for the card or it is a joint account. However, state laws vary and divorce or the death of your spouse could also impact your liability for this debt.
Family members, including spouses, are generally not responsible for paying off the debts of their deceased relatives. That includes credit card debts, student loans, car loans, mortgages and business loans. Instead, any outstanding debts would be paid out from the deceased person's estate.
Even if your spouse opens up a line of credit in their name only, you could still be liable for that debt. Creditors can go after a couple's joint assets to pay an individual's debt.
Do You Inherit Debt When You Get Married? No. Even in community property states, debts incurred before the marriage remain the sole responsibility of the individual. So if your spouse is still paying off student loans, for instance, you shouldn't worry that you'll become liable for their debt after you get married.
Your relationship with a person does not make you responsible to return the borrowed money that they independently take – unless you have taken a joint loan of money, that is on a joint bank or credit card. When joint loans are concerned, all the involved parties are equally responsible for paying the debt off.
When you die, any debt you leave behind must be paid before any assets are distributed to your heirs or surviving spouse. Debt is paid from your estate, which simply means the sum of all the assets you had at the time of your death.
If you live in one of the community property states – Arizona, Wisconsin, California, Washington, Idaho, Texas, Louisiana, New Mexico or Nevada – the law treats all the money you saved as being equally owned by both of you.
Financial infidelity is when couples with combined finances lie to each other about money. Examples of financial infidelity can include hiding existing debts, excessive expenditures without notifying the other partner, and lying about the use of money.
In households where one spouse shoulders all of the financial responsibility, that spouse is typically the husband. It is also common for wives to handle bill paying and shopping while husbands manage the big picture planning, such as retirement accounts, insurance and tax planning.
Generally, the deceased person's estate is responsible for paying any unpaid debts. When a person dies, their assets pass to their estate. If there is no money or property left, then the debt generally will not be paid. Generally, no one else is required to pay the debts of someone who died.
When an account holder dies, inform the deceased's bank by bringing a copy of the death certificate, Social Security number and any other documents provided by the court, such as letters testamentary (court documents giving someone legal power to act on behalf of a deceased person's estate) provided to the executor.
In most cases, the deceased person's estate is responsible for paying any debt left behind, including medical bills. If there's not enough money in the estate, family members still generally aren't responsible for covering a loved one's medical debt after death — although there are some exceptions.
But contrary to what some married couples may believe, just because someone's name is on a bank account does not mean that all the funds belong solely to them. Even if your name is on the account and your spouse's money has never touched it, you're not guaranteed to receive all or any of the money in the account.
Can You Empty Your Bank Account Before Divorce? However, doing so just before or during a divorce is going to have consequences because the contents of that account will almost certainly be considered marital property. That means it will be an equitable division in the divorce settlement.
Generally, each spouse has the right to withdraw from the account any amount that is in the account. Spouses often create joint accounts for practical and romantic reasons. Practically, the couple is pooling their resources to pay all their bill such as mortgage, car payments, living expenses, and childcare expenses.
Credit reporting companies regularly receive notifications from the Social Security Administration about individuals who have passed away, but it's better to also notify them on your own to ensure no one applies for credit in the deceased's name in the meantime.
In most states, the debt itself does not expire or disappear until you pay it. Under the Fair Credit Reporting Act, debts can appear on your credit report generally for seven years and in a few cases, longer than that.
In most cases, an individual's debt isn't inherited by their spouse or family members. Instead, the deceased person's estate will typically settle their outstanding debts. In other words, the assets they held at the time of their death will go toward paying off what they owed when they passed.
Matrimonial debt on divorce
These “matrimonial” debts would typically include debts incurred to fund building work and improvements to the family home, family holidays or the family car.