What happens to debt when a spouse dies

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Q. You recently had a story saying a wife isn’t liable for her deceased husband’s debt. If they are married and he has medical bills, etc., is she not liable? If he goes into a nursing home, wouldn’t all their communal assets be tapped, except perhaps their home? If there were credit cards in one name, maybe that debt does not get shared but what about all other kinds of liabilities? I sometimes consider remarriage but it feels financially scary, especially for retired people.
— Still single

A. Debts don’t automatically get erased when someone dies. It’s far more complicated.

When someone dies, debts they leave are paid out of their estate, which is made up of whatever money and property they leave behind.

You aren’t automatically responsible for a husband’s, wife’s or civil partner’s debts, said Brian Power, a certified financial planner with Gateway Advisory, LLC in Westfield.

“You’re only responsible for their debts if you had a joint loan or agreement or provided a loan guarantee,” he said. “If your husband’s estate was supposed to pass to you, indirectly, you will be paying off his debts since the creditors will have first claim on the estate.”

Power said state laws vary regarding identifying the order of priority in which estate debts must be paid, but typically, the executor must pay the decedent’s burial and funeral costs after the expenses of estate administration.

Paying the medical bills for the decedent’s last illness, or for his hospitalization or hospice care, is usually the next payment priority, although taxes given priority by federal law may need to be paid ahead of these bills for a last illness, Power said.

“The executor must file the decedent’s last tax return and make any tax payments due, and on large estates, the executor must also file state and federal inheritance as well as estate tax returns with payment,” Power said.

If the estate is large enough, the probate court may not allow the executor to access the estate assets for other payments until approval is received from state tax agencies, he said.

“If the estate has enough assets to pay all taxes and outstanding bills, the executor may have to exercise her judgment to determine which estate assets to draw from to make those payments,” he said.

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