By Pedro Bianco
En esta noticia
When someone dies leaving debts, many family members fear the worst: that those obligations automatically “pass” to children or a spouse. It is one of the most common myths, and, in most cases, it is false.
In the United States, debts are paid from the deceased person’s estate, not from the pockets of the heirs.
Do heirs inherit debt?
The basic rule is clear: The debts of a person who dies are paid with the money and assets they left behind, that is, from their estate.
Family members, including children and a spouse, generally are not responsible for paying those debts out of their own money.
In practice, during probate, the deceased person’s assets are used to pay what they owed, and only after that is whatever remains distributed among the heirs. If nothing is left, there is no inheritance, but family members also do not have to pay out of pocket.
What if the debts are greater than the inherited assets?
In that case, the estate becomes insolvent and, in general, the debts simply go unpaid. According to the Consumer Financial Protection Bureau (CFPB), if the estate cannot pay, the debt usually is not collected, and family members are not required to cover it themselves.
When a family member CAN be required to pay inherited debt
Here is the fine print worth knowing, because there are situations in which a person can be responsible for the deceased person’s debt:
- If they signed as a co-signer on a loan with the deceased person. If they were a joint account or credit card holder. Being an “authorized user” on the card does not count as being a co-holder.
- If they are the surviving spouse in a community property state, where they may share responsibility for certain debts incurred during the marriage.
- If they live in a state with “necessaries” laws, which hold a spouse responsible for certain essential costs, such as health care.
Outside these cases, the debt is owed only by the deceased person’s estate, not by family members.