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I know this is more a legal question but does anyone know what happens to the debt of a person (past taxes and other debts) when they die? For example, if a man has most of the debt in his name only, would his surviving wife be responsible for anything not in her name?
The deceased estate is responsible for paying. if its husband and wife then half the assets are usually considered the deceased unless they werent jointly owned and even then depending on the state they may be able to collect from a married couple. im no lawyer so if its really crucial check with a local attorney
If you die indigent or bankrupt, with no property and no savings in the bank, there is no actual estate. This can happen if you have no assets and have only enough income to cover your current living expenses (Social Security, Disability, Medicaid). At that point, if you have debt, only a spouse or co-signer is liable for it. There is no estate to recover from. Surviving adult children are NOT responsible for a parent's debt if there is no estate & no assets.
My attorney said he sees it all the time, misinformed adult children thinking they have to pay off their late parents' credit cards or hospital bills. If there is an estate, the companies will come after it to be paid back, but if there is no estate or assets (ie no money), it's just too bad for them.
In most places, if debt is only in one name - they cannot automatically come after the spouse. Now - if its taxes, and the couple was filing jointly -- then that's not "in one name".
But, if my husband goes and gets a car, and then dies - they can't come after me. They can come after his share of equity in our HOME (joint, shared property) or our bank account (joint account) - but if those don't settle the debt, I am not responsible for the remainder as long as I did not cosign.
This may not apply to community property states, but in other states, in general, if the debt is jointly held, the creditor can go after the surviving debtor and/or the estate. However, if the debt was held solely by the deceased, the creditor is SOL if there are no estate assets. Keep in mind that assets held by "joint tenants with right of survivorship" or "tenants by entirety" become the surviving joint tenant's assets immediately upon the death of the other tenant. Thus, property held by husband and wife is usually exempt from creditors if the surviving spouse did not enter into a contract with the creditor. As noted above, if the husband and wife filed joint taxes, the IRS will probably collect from the surviving spouse. I'm fairly certain (but not positive) the IRS cannot collect from the surviving spouse if the surviving spouse did not file a joint return with the now deceased spouse.
This is general information and may not apply in your particular situation. Seek advice from an attorney in your state.
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