The Responsibility for Debt When a Spouse Dies

The death of a spouse or loved one often comes as a shock, and not everyone dies with their finances in the shape they would like. Dealing with such issues may be difficult, especially for a spouse in mourning, but their importance cannot be overestimated. In some cases, the spouse has no responsibility for the debt, but not always. The specific nature of the debt varies depending on circumstances, as does responsibility for the debt.

Executors and Administrators

If the deceased left a will behind, it falls to a designated person -- called an executor -- to handle the deceased's estate, including debts. If there was no will, then the courts appoint an administrator to fulfill the executor's job. A will usually specifies who will serve as executor: a family lawyer, for example, or a trusted accountant. In some cases, the will may specify a spouse as executor, in which case he or she is charged with handling the debt from the assets in the estate. In cases of an administrator, many states automatically assign the role to the spouse, who then becomes responsible for handling the debts.

Paying Off the Debts

In cases where the deceased has more debts than assets, the law typically assigns priority to certain creditors. Federal law states that the U.S. government makes first claim to any debts, followed by state governments and then institutions such as banks and credit card companies. Paying off such debts doesn't necessarily affect the spouse's income, provided the estate's assets can address it. It may diminish or eliminate any assets the spouse inherits from the will, however.

Insolvency

In cases where the estate is insolvent, and no money is left to pay off debts, then the spouse usually is not responsible for the remainder. The debt is written off and the creditors cannot harass the spouse further for repayment of the debt. Specifics may vary depending upon state and local laws, and the rule generally applies to states that do not have community property laws.

Community Property Laws

As of 2011, 10 states have community property laws: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Within these states, debts built up over the course of a marriage may be considered jointly held, in which case the spouse must pay them off after the deceased passes. The particulars vary by state and are influenced by specific rulings within those states. If you live in one of these states and feel that you may be subject to community property laws, contact a qualified attorney for advice.