by Gary Foreman

You have separate accounts. Is that enough to protect you from inheriting your spouse’s debt? You may or may not be in the clear. Here’s what you need to know.

Dear Gary,
My question is about each married individual’s responsibility in case of the death of the other. I will use my husband and I as an example. We have separate bank accounts, separate loans, and separate credit cards except for our heating utility company. Our marriage is the second for each of us. While I have established a very good credit history, my current husband has bad credit. Will I be responsible for paying off his debts if he should die first? I have never used his credit cards and my name is not on any accounts of his. Our cars are also only listed in his name or mine.
Nancy

While none of us like to think about it, we should all be prepared for our own deaths and those near to us. Nancy is very smart to ask these questions now while she can still take any corrective action that’s necessary.

The Two Ways You May Be Responsible for a Spouse’s Debts

There are two ways that you can find yourself being responsible for another person’s credit card debts. The first is if you agree to be responsible for debts incurred on the card. You’ll need to sign an application for this to happen. Generally you’ll be the owner/co-owner of the account or have co-signed on the account. But, you’ll know if you’ve obligated yourself this way (unless you didn’t bother to read what you were signing). In Nancy’s case, it appears that she hasn’t done that.

The second way that you could be responsible for credit card debts is less obvious. Let’s take Nancy’s situation. Suppose that she is not personally responsible for the card. Only her husband (from now on known as “Hubby”) is. So if Hubby should die, the credit card company must look to his assets for payment. What does he own? Anything that’s titled in his name (like the car that Nancy mentioned) is fair game for creditors. So if Hubby is not on the title to Nancy’s car, her car should be safe from his creditors.

Joint Accounts, Joint Debts

Where it gets tricky is with anything that’s owned in a joint account. In some joint accounts you only own your portion of the account (i.e. half of an account with two joint owners or 1/3 of an account with three owners). But in most, it’s assumed that either party owns all of the account. In other words, either Nancy or Hubby could write a check for the entire balance of a joint checking account. In this case, the credit card company would say that Hubby owned all of the checking account and claim the entire balance to pay off Hubby’s credit card bill. And, they’d get the money.

Nancy has been wise to avoid joint accounts. She’s gone a long way to avoiding debts that aren’t her debts, but there’s still one more hurdle that she’ll need to clear.

When You Should Consult an Attorney

There’s a patchwork of state laws that must be considered. For instance, your state may have a law that says that it’s assumed that half the property acquired during a marriage belongs to each partner. That could mean that half of your property (including savings accounts, etc.) is available to pay your spouse’s debts. Only research in your state laws will alert you to all the dangers. In some cases, a lawyer will be required.

Whether Nancy needs to talk with one will depend on her circumstances. She can do the basic things herself (and for the most part she already has). Keep separate credit card accounts. Don’t co-sign or guarantee any loans. Keep your assets separate.

If either Nancy or Hubby has significant assets (and, you’ll need to decide what “significant” means to you), it might be wise to see an attorney. If you come in with the facts and specific questions, it shouldn’t be too expensive to find out if you have any exposure to debts that you didn’t create.

As a general rule, you don’t become responsible for someone’s debts because you’re related to them, but the exceptions to this rule can be really expensive! So find out before it’s too late.

• Could Debts Ruin Your Retirement?
• Getting a Reluctant Spouse To Consider Credit Counseling
• Baby Boomers and Financial Infidelity
• End-of-Life Planning Everyone Needs To Do
• What Happens to My Debts When I Die?

Reviewed March 2024

About the Author

Gary Foreman is the former owner and editor of the After50Finances.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.