When a loved one dies, the last thing family members want to think about or deal with are creditors calling to collect payment on a debt owed to them. Unfortunately, the surviving spouse and family members will have to deal with any debts, but they may not be responsible for paying those debts.

When someone passes away with debt, it doesn’t just disappear. It often defaults to the person’s estate to pay for any outstanding debts. Family members should refrain from dividing up personal items of the deceased until the debt is paid.

However there are a few exceptions to when a deceased family member’s debt is transferred to their spouse, executor or an administrator.

  • State laws require the surviving spouse, executor or administrator to pay an outstanding bill or particular debt that is jointly owned.
  • The state requires the surviving spouse, executor or administrator to use community property as payment for the deceased’s debt. Community property states include Alaska. If an agreement is signed then community property in the following states can be used to pay off the debt: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
  • If the surviving spouse, executor or administrator co-signed a loan, they will be responsible for paying off the debt.
  • Joint account holders for credit cards will be responsible for all outstanding debt. But an authorized user is not. If you are an authorized user, stop using the credit cards, because it will be seen as fraud.

After the death of a loved one, the surviving spouse, executor or administrator should notify all creditors and credit reporting agencies to prevent any potential identity theft. You should also request a copy of the deceased’s credit report, which will outline any outstanding debt.

If these exceptions don’t apply to your particular situation, then the debt can only be paid by the estate. It is essential to make sure your estate plan is up to date to help avoid any additional financial issues in the future.