Who Pays My Spouse’s Debts If They Die?

             Losing a loved one such as a spouse is a difficult time sometimes made more difficult due to having to navigate the legal proceedings following a person’s passing. In Indiana, if a person dies with more than $100,000 in assets, an estate may be needed in order to transfer that person’s assets to their heirs. If that person died with outstanding debts, including credit card debt, mortgages or medical debt, even more work might need to be done before distributions can be made and the estate can be closed. Understanding how and when to pay those debts is imperative to avoid future headaches.

When it comes to paying the debts of a deceased spouse, the executor of the estate, often the surviving spouse or a family member, is responsible for ensuring creditors are paid out of the estate. Any creditor who wishes to collect an outstanding debt from the deceased must first file a claim in the estate. This includes medical debt, credit card debt, car loans, mortgages, etc. If a creditor’s claim is valid, the executor must pay the debt out of the assets of the estate. However, if the deceased had large amounts of debt, the assets may not be enough to pay the creditor.

Generally, if there are not enough assets to pay creditors out of the estate, the surviving spouse and/or other family members are not responsible for paying the debt out of their own pocket and the debt will go unpaid. However, if the deceased debts were co-signed or owned jointly, such as a credit card account or a car loan, the living co-signor/account holder becomes responsible for the remaining debt. An exception to this rule is federal student loans as federal student loans are discharged upon death.

In a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), any debt owed by the deceased spouse automatically becomes the responsibility of the surviving spouse. While Indiana is not a community property state, as previously stated, any co-signors are loans, leases or mortgages are responsible for unpaid debt. This could also include money owed to nursing home or long-term care facilities.

If a debt of the deceased is unpaid due to their being no money left in the estate, creditors cannot require a spouse or family member to pay the remaining debt. Under federal law, debt collectors may still contact you or family member to discuss the unpaid debt, but they may not state or imply that you are personally responsible for paying your spouse’s debt. Debt collectors may not harass, oppress, or abuse you and you have the right to tell a debt collector to stop contacting you.

Probate law is state-specific so you should always check the laws of your state or contact an attorney to assist you with the administration of an estate. If you have any questions or concerns regarding the payment of debts in probate or other elder law issues in Indiana, McNeelyLaw has Indiana estate attorneys that are available for consultation. Contact us at 317-825-5110 to speak with an attorney today.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.