When a person dies, the estate executor or administrator pays the debts of the deceased out of the estate. If there is no value in the estate or money is used before all creditors are paid, unpaid creditors remain unpaid.
Makeup of Estate
The estate is composed of bank accounts, CDs, annuities, securities like stocks, bonds, and mutual funds, and any property the deceased has full or joint interest in.
Heirs
Heirs, including the deceased individual's spouse, are not responsible for debt, as debt cannot be inherited.
Exceptions
If a credit card was taken out with the spouse or someone else as cosigner with the deceased, that cosigner assumes full responsibility for the debt. This means the individual actually had to sign the credit application, not just have been given an extra card.
Homes
If a home is held as "joint tenants with right of survivorship," the spouse may be liable for one half the equity in the home. If held as "tenants in the entirety," the home goes to the spouse without any part being claimed as estate assets.
Insurance
Any asset for which a beneficiary is named, such as life insurance proceeds, is considered outside the estate and passes to that beneficiary.
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