Am I Responsible for the Debts of My Deceased Spouse?

You are not necessarily responsible for the debts of your spouse.

Your spouse died.

You have become the executor of his or her estate.

The issue?

Your spouse had unpaid debts.

Are you responsible for settling them?

According to a recent nj.com article titled “My husband died. Must I pay his loan?” the answer depends on a few factors.

If the debt was incurred for necessary goods and services, the answer is yes.

What qualifies under this category?

This would include things like medical expenses.

What if it was a debt for an RV purchased in your spouse’s name alone?

This will depend on the contract created by your spouse with the lender.

Typically, the estate may need to such liquidate assets and pay back debts to creditors.

There is often an order to the payment of debts.

For example, as noted in the article, New Jersey law provides a "batting order" for paying creditor whereby the estate first pays the funeral home, then expenses for administering the estate, then the office of public guardians for adults, any taxes, and medical expenses, any judgments, and any other claims.

Both Kansas and Missouri have a similar approach.

If you were to inherit a life insurance policy or retirement account through a direct beneficiary designation, there is no claim on these funds against the debts of the decedent.

There is an exception.

What is it?

If you are required to pay a debt by law because you were the spouse or if you were a co-signer on a loan.

What if the estate runs out of funds?

Any claims in the same tier must be paid pro rata.

This is a lot of information, I know.

Working with an experienced estate planning attorney can help you navigate the specifics of your situation.

Reference: nj.com (August 20, 2018) “My husband died. Must I pay his loan?”