Your loved one has passed.
Suddenly, there are so many things to do that you don’t have time to grieve the loss. Near the top of the list is the prospect of handling any debts accumulated by your spouse that were only in your spouse’s name. In order to begin dealing with this daunting task, here’s a brief guide:
First, halt any new credit reports from being created regarding your spouse. Alert the three credit reporting agencies about the death (Equifax (www.equifax.com), Experian (www.experian.com), and Trans Union (www.transunion.com)). The credit history of the deceased will be updated with this news and his or her name will be eliminated from mailing lists.
Second, contact all creditors and provide them with a copy of the death certificate for verification.
Third, before you make any payments on any of your spouse’s debts, determine the type of debt account, applicable state law, and the individual who incurred the debt. Any jointly established debt would be the surviving spouse’s responsibility, such as joint credit cards. The surviving spouse is subject to the deceased spouse’s tax debt, if a joint income tax was filed. But if the deceased spouse filed taxes individually, the spouse’s probate estate becomes liable for those taxes in common law states. In probate estate states, assets only in the deceased spouse’s name that have no beneficiary may have a lien claim filed against them.
Fourth, generally the surviving spouse is not held accountable or liable for the deceased’s spouse’s debts. However, in some states with community property laws, individual debts are viewed as shared jointly between the spouses. Surviving spouses could also be expected to pay for debts of necessities, such as medical assistance or food.
Fifth, the personal representative of the deceased spouse’s estate must give published notice to all known creditors of the spouse. If probate is unable to pay for the total amount of the debt, the claims are prioritized by state law and paid on a pro rata basis. This does not include joint debts between spouses.
While the thought of not taking on your deceased spouse’s individual debts is positive, remember that this means the beneficiaries of the deceased spouse’s estate will receive less of their legacy as payment is made for those debts.
If you need help from an attorney experienced in the nuances of probate and estates, contact us to schedule a consultation (336-275-9567).