It is, however, noteworthy to mention that bereavement, and in this case, the death of a spouse is one of the most trying and challenging events that an individual can face. Besides mourning the loss, there could be many other issues that might require one to deal with more financial and legal formalities. One common question that arises is: Who is liable for the bills and debts when my spouse dies?
The short answer is: that is a good question it depends. In some or sometimes even none of the cases, you as the surviving partner are expected to clear your partner’s bills once they are gone. It is important to examine the following when defining responsibility or understanding the extent of one’s responsibility.
Community Property States If your state follows the community property rule, then it means that you can be held responsible for all the debts with the accounts in your spouse’s name alone. The nine current community property states are: The nine current community property states are:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
In these states, debts contracted during the marriage are normally classified as marital liabilities. However, there are exceptions. Some of the debts you don’t have to repay include those accrued as per a prenuptial agreement and credit related to criminal activities that your spouse engaged in.
Equitable Distribution States Other states also have fairly favorable provisions relating to the division of marital assets and liabilities. This means that marriage property and liabilities are split in a way that they do not have to be split 50/50 in case of divorce or death of a partner. Alimony is based on factors such as income, assets, custody arrangements as well as the period for the marriage.
However, you might be held liable for debts incurred in these states and joint accounts opened in the two states. However, it is only when a judge presiding over a particular case decides that someone is legally responsible for the individual debt, then such responsibility is deemed compulsory. Thus, you might be able to talk about which debts you must pay back. In such a case, you might consider seeking relief through a Hardship Petition if the debt burden is deemed to be high.
Exceptions Across All States
No matter what state you live in, there are certain debts you definitely should not liable for No matter what state you live in, there are certain debts you definitely should not be liable for:
- This is about credit obligations that your spouse fraudulently concealed from you.
- This debt is a result of criminal activities such as embezzlement, fraud, and other related offenses.
- Debt that is in the name of the spouse alone with the other spouse agreeing to the debt before marriage.
In addition, if you were never included as an account holder or signer, then you cannot be held personally liable for the credit card bills, medical bills, car loans, or mortgages your spouse took on. However, the collectors can still attempt to reach out to you for payment – this brings us to the next topic.
Manage Your Creditors and Collectors
As mentioned by law, you have only a few months after the death of your spouse to sort out all the issues connected with the money matters. This means calling institutions and canceling the account if you were the primary account holder which is you, the spouse.
Often, collectors try to solicit the remaining spouse to pay for the things that the deceased owed. This can put additional pressure during what is already a sensitive period of grief. But remember: Being called by bill collectors does NOT equal your fault.
When collectors begin to call, you need to identify if the debt is or was only in your spouse’s name and secondly 2) if you reside in a community property state. This is followed by how to go about it. Here are additional tips:
- Demand a written notice of the debt and avoid paying even a dime until an assessment of the estate has been done.
- In case the collectors are aggressive and start issuing threats that they will sue you – do not worry. Most of the time in individual debt, there is a need to establish in court that you are liable for it.
- One is not compelled to pay from his income or property unless formally ordered to do so. However, any joint property remains a viable aim.
- Record all manner of payments from the estate funds according to the best practices. This is useful when someday you’ll have issues with how some of the funds are being spent.
- If the finances are more complicated or if the borrower is receiving constant calls from the collector, it is advisable to seek the services of an attorney. It helps them be able to review the situation and sort out debts as they are supposed to be.
In a way, Estates and Death Certificates Assist
This simply means that after the probate process, your spouse’s property is then used to clear all debts and other bills. The remaining amount may be wiped out as per the state laws if the debts of the estate exceed the resources of the estate.
If you want to obtain a death certificate, you can visit your state vital records office where they will provide a copy for a few dollars. Then, forward the same copy to other necessary organizations such as banks, the companies that offered him/her a mortgage, and the credit bureaus, putting “deceased” beside the name of your spouse. This brings about the closure of accounts.
To be prepared, in this case, means to be ready to take action immediately and helplessly, but not panic.
In conclusion, the case of dealing with debt responsibility after the loss of a spouse is not a simple one. Some communities have set rules to determine distribution based on the community property regime while others have set rules on distribution based on the equitable distribution regime. The place of your business, your property, the liabilities you have to other individuals or organizations, and even the agreements that you have made before marriage affect what you have to make.
As Woods puts it, being proactive can help to calm your mind. It may be more appropriate to talk about debts, properties, and eventualities way before they even become an issue. Check with your accounts if you are listed as a joint account holder or not. Lastly, contact an attorney or a financial adviser to explain what situations may occur in the future.
If you are heading this way, with a little planning and the help of financial advisors it is possible to minimize guesswork and therefore less financial strain on an already difficult period. Although, to some extent, the idea of anticipating a future event is useful, do not allow the presence of unknown debts to completely overpower the grieving process. Introduce means for getting legal and monetary help to manage one’s financial issues and tie the knots responsibly. However, this had to be reconciled with the fact that in time, even some fairly large debts that affect you can be paid off.
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