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Who pays for a deceased loved one’s debt?

On Behalf of | Jan 22, 2023 | Estate Planning

When a loved one dies, the family members left behind have some difficult decisions to make. One of the responsibilities they may need to address is any outstanding debts the deceased had. Whether or not the spouse or other family members are responsible for paying these debts can be confusing and stressful.

Generally, their estate is responsible for paying the deceased’s debts. The estate includes all the assets and liabilities of the deceased person at the time of death. The administrator or executor must pay off debts using the estate assets.

Joint loans, credit cards and bank accounts

However, it is essential to note that the spouse might have to pay off the debt in some cases. A surviving spouse must pay off liabilities if they co-signed a loan or took out a joint credit card. Even if only the deceased used the credit card, the surviving spouse must pay off the card if their name is on the account.

Non-marital property

Usually, the non-marital property of a surviving spouse is safe from creditors. If the spouse has a separate bank account or obtained assets through an inheritance or gift, the spouse is under no obligation to use these assets to pay off liabilities. According to the Maryland General Assembly, a spouse has no obligation to pay off debts accrued by their spouse before marriage.

Children and extended family do not have to pay off any debts owed by the deceased. The only rare case where they might owe creditors money is if they shared property with the deceased relative or used a joint bank account or credit card.

Most of the responsibility for paying the deceased’s debts falls on the deceased’s estate. However, the type of debt can affect whether the family members are responsible for paying certain liabilities.