Am I responsible for my husband’s business loan?


Q. My husband passed away a few months ago, leaving me with a huge loan against my business. I knew nothing of this loan and never signed anything on the loan. Am I responsible for any of that? The business is in both of our names but the loan is in his name only.
— In trouble

A. The answer to your question will depend in large part on the structure of the loan.

There are two ways that this loan could be structured, said Alex Coriddi, a certified financial planner with RegentAtlantic in Morristown.

One possibility is that is a loan in which business – real property, equipment, inventory, etc. – was put down as collateral, he said.

“This would put these assets in jeopardy if the debt is not being paid,” Coriddi said.

Or the loan may have been structured as an unsecured personal loan. For a personal loan, the debt owed does not transfer to you, but it may still affect you, he said.

“The debt becomes the responsibility of your husband’s estate,” Coriddi said. “This could affect you because this can lower the amount of assets you may have received from your husband after his passing. This may include his portion of the business.”

You didn’t say if you’re in New Jersey. If you’re in a community property state – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin – Coriddi said this would make even an unsecured personal loan in just his name your responsibility.

We recommend you speak with an attorney who can help you determine the nature of this loan and where your responsibility lies.

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This story was originally published on Oct. 4, 2019 presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.