The loss of a loved one is difficult to cope with, but if the loved one left debts behind, it can be even tougher. It is important to know who is responsible — and who is not responsible — for the debts of a deceased person. This is even more true now than in the past, because creditors and debt collectors have become very aggressive lately about contacting a deceased person’s family members and trying to get them to pay debts.
In general, when a person dies, that person’s estate becomes responsible for any debts the person owed. The person’s executor or personal representative is responsible for paying those debts out of the property of the estate. The executor is not personally liable for the debts and doesn’t have to pay them out of his or her own pocket; they are paid only out of the estate’s property. So in general, no relative of a deceased person should have to pay any debts, unless that person is independently liable for them because he or she cosigned a loan or jointly assumed an obligation.
What about credit card debt? Responsibility for credit card debt depends on whether someone else was a joint owner of the card. If someone else was a joint owner, then the creditor can collect from either the estate or the joint owner. If there are not sufficient assets in the “estate,” then the joint owner is responsible. But be careful: A “joint owner” is different from an “authorized user.” Just because someone’s name is on a credit card does not mean they are a joint owner. They are not a joint owner unless they actually signed an agreement promising to be responsible for any charges. Not a joint owner, but a surviving spouse? California is a “community property” state. Generally, debt incurred by a spouse for the benefit of the family is considered a “community debt” and the spouse is responsible for repaying the debt.
Next month, we will look at other examples of debt left by a deceased relative.
Ms. MacDonald’s practice is limited to estate planning, probate, conservatorships, elder law and trust administration. Ms. MacDonald maintains her practice in the Santa Clarita Valley at 25115 Avenue Stanford, Suite B-124 in Valencia, California. She can be reached at 661-294-6464.