Things you must know about inheriting debt from your loved ones
11 minute read
Question: live in Colorado with my wife. We are not joint owners of credit cards. Neither did I sign to pay any of my wife’s medical bills. So, if my wife dies, am I responsible for her credit card debt and medical debt?
Lyle Solomon, California consumer debt attorney, responds…
If a parent or spouse recently passed away, you may find yourself coming into an inheritance. But what if in addition to family heirlooms or investments they also had a fair share of unpaid bills and IOUs? Can you inherit debt from a deceased loved one or be held responsible if you’re overseeing their affairs?
Read on to learn when you could be responsible for someone else’s outstanding debt and what you can do about it.
Dealing with the debt of a deceased spouse
In most cases, no, you cannot be held accountable for another person’s debt after they leave this earth. This is true for credit card debt and other types of debt, regardless of your relationship with the deceased. It’s also true even if you’re the one overseeing that person’s estate.
According to the Consumer Financial Protection Bureau (CFPB), “If you’re the executor, administrator, or personal representative for your spouse’s estate, this does not make you responsible for paying the debt with your own money, unless the debt is also yours. Being a personal representative means you can use estate assets to settle your loved one’s debts, after making payments to survivors according to state law.”
Can a spouse inherit credit card debt?
There are circumstances where you could be held responsible for a deceased person’s debts. However, those circumstances are highly specific:
- You cosigned the credit card. If you cosigned a credit card, you are responsible for making the payments on that account. This isn’t very common, however, since few credit card companies allow adding cosigners anymore.
- You had a joint credit card account. If so, you would still be responsible for paying off any debt on that card. Recognize that joint account holders and authorized users are two different things. You wouldn’t necessarily owe the obligation if your spouse only designated you as an authorized user.
- State law demands it. In some cases, state law mandates that a spouse pay a specific kind of debt, such as credit card-purchased medical expenses.
According to the CARD Act of 2009, credit card companies must inform the executor of an estate if there is a balance owed. While the estate is being resolved, the issuer is not permitted to add fees or penalties to the account.
Stuck with overwhelming credit card debt? We can help.
Can a spouse inherit medical bills or medical collections?
In addition to being emotionally taxing, losing a spouse can be financially burdensome as well. Although in most cases a spouse is not accountable for their deceased partner’s debts (unless they are jointly owned), medical debt is unique.
Most states recognize the Doctrine of Necessities which means that there’s an implied promise that you’ll pay for the treatment your spouse received at the hospital. As a result, you may be liable for such expenses after your spouse’s passing.
You could also be held directly responsible for any medical debt if the patient couldn’t sign the paperwork themselves, and you, the next of kin, are asked to do so.
The Doctrine of Necessities
The Doctrine of Necessities in your state may allow creditors to sue you for your spouse’s debts. This law was discontinued in twelve states so it may not apply depending on where you live. However, even in the states where it still exists, the way actions can be carried out can vary by state.me and
A few states permit lawsuits against the husband for the debts of his wife, but not against the wife for the debts of her husband. Only the state of Minnesota allows a lawsuit against the wife but places a cap on the number of money creditors may recoup. Some states do not permit medical debt litigation at all.
Below is a list of states where the Doctrine of Necessities is active, repealed, and how it’s applied.
|Repealed?||State Doctrine of Necessaries Rule For Spousal Debt||State Statute or Case Law|
|Alabama||Yes||None: doctrine violates the Equal Protection Clause.||Emanuel v. McGriff, 596 So.2d 578 (Ala. 1992)|
|Alaska||Yes||None||AS 25.15.050; Long v. Newby, 488 P.2d 719 (Alaska 1971)|
|Arizona||No||Medical debt is community debt. However, no cause of action against the separate property of one spouse for medical care of the other spouse.||Phoenix Baptist Hospital & Medical Center, Inc. v. Aiken, 877 P. 2d 1345 (Ariz. Ct. App. 1994)|
|Arkansas||Yes||None||AR Code § 9-11-516 (2012); Medlock v. Fort Smith Service Finance Corp., 803 S.W. 2d 930 (Ark. 1991)|
|California||No||Spouses must support each other with their separate property if no community property is available.||Family Code Section 914; Credit Bureau v. Terranova, 15 Cal. App.3d 854, 93 Cal. Rptr. 538 (1971)|
|Colorado||No||State statute imposes mutual obligations of support on both spouses, and joint liability while residing together.||RCW 26.16.205; § 14-6-110 (1995)|
|Connecticut||No||Both spouses jointly liable for family expenses including reasonable and necessary medical care||Conn. Gen. Stat. 46b-37 (rev. 1989)|
|Delaware||No||State statute imposes mutual obligations of support on both spouses.||Del. Code Ann., Title 13, § 502 (1993)|
|D.C.||No||DC statute imposes mutual obligations of support on both spouses and joint liability.||D.C. Code Ann. § 30-201 (1996)|
|Florida||Yes||None: doctrine violates the Equal Protection clause.||Connor v. Southwest Florida Regional Medical Center, Inc., 668 So. 2d 175 (Fla. 1995)|
|Georgia||Yes||Legislature repealed doctrine of necessaries in 1979.||1979 Georgia Laws 466, 491|
|Hawaii||No||State statute imposes mutual obligations of support on both spouses.||Haw. Rev. Stat. Ann. § 510-8(h); § 572-24|
|Idaho||Yes||S.L. 2011, Ch. 149, § 1, effective July 1, 2011, repealed Idaho Code § 32-1002||Idaho § 32-1002|
|Illinois||No||Both spouses jointly liable for family expenses including reasonable and necessary medical care||750 ILCS 65/15; St. Mary of Nazarath Hosp. v. Kuczaj, 528 N.E.2d 290 (Ill. App. Ct. 1988)|
|Indiana||No||Secondary liability on “financially superior spouse” if the responsible spouse cannot pay.||Porter Mem. Hosp. v. Wozniak, 680 N.E.2d 13 (1997); and Barstrom v. Adjustment Bureau, Inc., 618 N.E.2d 1 (1993)|
|Iowa||No||Reasonable and necessary expenses of the family are chargeable upon the property of either husband or wife; they may be sued jointly or separately||IA Code § 597.14; St. Luke’s Medical Ctr. v. Rosengartner, 231 N.W.2d 601, 602 (Iowa 1975)|
|Kansas||No||Common law rule applies equally to both spouses||St. Francis Regional Medical Center, Inc. v. Edward Bowles, 251 Kan. 334 (1992), 836 P.2d 1123|
|Kentucky||No||A husband is liable for his wife’s medical expenses. A wife is not liable for her husband’s medical expenses.||KRS § 404.040; Rhodus v. Proctor, 433 S.W.2d 625; Carpenter v. Hazelrigg, 45 S.W. 666, Atkins v. Atkins’ Adm’r, 262 S.W. 268; Somerset Manor, LLC v. Rees, 2011 Ky. App. Unpub. LEXIS 532; and Adams v. Riddle, 2010 Ky. App. Unpub. LEXIS 151.|
|Louisiana||No||Common law rule applies equally to both spouses||La. Civ. Code art. 2372 and Guidry v. Guidry, 467 So.2d 96, 98 (La. App. 3rd Cir. 1985)|
|Maine||No||State statute imposes mutual obligations of support on both spouses.||Me. Rev. Stat. Ann. tit. 19-A, § 1652 (1998)|
|Maryland||Yes||None||Condore v. Prince George’s Co., 289 Md. 516, 531-32, 425 A.2d 1011 (Md. 1981)|
|Massachusetts||No||Married woman’s liability for necessaries furnished to her family limited to $100 providing she has property worth at least $2,000 and consents.||Mass. Gen. L. ch, 209, § 7 (1994)|
|Michigan||Yes||None: doctrine violates the Equal Protection Clause.||North Ottawa Community Hosp. v. Kieft, 578 N.W.2d 267, 273 (Mich. 1998)|
|Minnesota||No||Wife is liable for certain household items, but not medical care.||Minn. Stat. § 519.05; Boland v. Morrill, 148 N.W. 2d 143 (Minn. 1967); Plain v. Plain, 240 N.W. 2d 330 Minn. 1976)|
|Mississippi||Yes||None||Govan v. Medical Credit Servs., Inc., 621 So. 2d 928 (Miss. 1993)|
|Missouri||No||Rule applies equally to both spouses||Johnson by Burns v. Johnson, 811 S.W.2d 822, 825 (Mo.App. 1991); Hulse v. Warren, 777 S.W.2d 319, 322 (Mo. Ct. App. 1989)|
|Montana||No||Husband and wife equally liable for expenses for necessities of the family.||Montana 40-2-106|
|Nebraska||No||90% of the married woman’s wages are exempt from secondary collections.||Neb. Rev. Stat. S42-201 (1993); Nichol v. Clema, 195 N.W.2d 233 (Neb. 1972)|
|Nevada||No||Spouses must support each other with their separate property if no community property is available. The burden is higher on husbands than on wives.||NRS 123.100; Swogger v. Sunrise Hosp., Inc., 88 Nev. 300, 496 P.2d 751 (1972)|
|New Hampshire||No||A husband is liable for his wife’s medical expenses. A wife is not liable for her husband’s medical expenses.||RSA 546-A:2 (1974); St. Joseph Hospital v. Rizzo and Savard, Nos. 94-268 94-269, (NH 1996)|
|New Jersey||No||Common law rule. May apply to credit card debt if charges were to support the household.||Monte v. Monte, 212 N.J. Super. 557 (App. Div. 1986) and Jersey Shore Medical Ctr.-Fitkin Hosp. v. Estate of Baum, 84 N.J. 137 (1980), 417 A.2d 1003|
|New Mexico||No||Both spouses contract towards each other mutual obligations of support.||NM Stat. § 40-2-1 (2013)|
|New York||No||State statute imposes mutual obligations of support on both spouses.||N.Y. Jud. Law § 412; Domestic Relations § 32; Family Court Act § 412-413; Domestic Relations Law § 50; General Obligations Law § 3-301; Medical Bus. Assoc., Inc. v. Steiner, 183 A.D.2d 86, 86 (N.Y. App. Div. 1992)|
|North Carolina||No||Common law rule applies equally to both spouses||Alamance County Hospitals, Inc. v. Neighbors, 315 N.C. 362, 338 S.E.2d 87 (1986); North Carolina Baptist Hosps., Inc. v. Harris, 354 S.E.2d 471, 472 (N.C. 1987)|
|North Dakota||No||Applies to both spouses for support but does not apply to medical debt.||1993 N.D. Cent. Code §14-07-08; § 14-09-10.|
|Ohio||No||State statute imposes mutual obligations of support on both spouses.||Ohio R.C. 3103.01 and 3103.01|
|Oklahoma||No||Spouses are jointly or severally liable for debts incurred on necessaries furnished to either spouse||OK Stat. Title 43, § 209.1|
|Oregon||No||Mutual support obligation on both husbands and wives while residing together.||OLR § 108.040; Hansen v. Hayes, 154 P.2d 202 (Ore. 1944)|
|Pennsylvania||No||Common law rule applies equally to both spouses||23 Pa. C.S.A § 4102; Porter v. Karvivalis, 718 A.2d 823, 827 (Pa. Super. Ct. 1998); Albert Einstein Med. Center v. Gold, 66 Pa. D & C 2d 347, 349, 25 Pa. Fiduc. 337 (1974) (quoting Conway v. Dana, 456 Pa. 536, 539, 318 A.2d 324 )|
|Rhode Island||No||Mutual support obligations on both husbands and wives.||Landmark Medical Center v. Gauthier, 1994.RI.767 (RI 01/06/1994)|
|South Carolina||No||Rule applies equally to both spouses||Richland Mem’l Hosp. v. Burton, 318 S.E.2d 12, 12 (S.C. 1984)|
|South Dakota||No||Applies to both spouses for support but does not apply to medical debt.||1994 S.D. Laws § 25-2-11|
|Tennessee||No||Mutual support obligation on both husbands and wives||Outpatient Diagnostic Center v. Ralph Christian, No. 01A01-9510-CV-00467, (Tenn. Ct. App., April 30, 1997)|
|Texas||No||Spouses must support each other with their separate property if no community property is available.||Family Code Title 1, Subtitle A, Chapter 2; Finney v. State, 308 S.W.2d 142 (Tex. App. 1957)|
|Utah||Yes||Spouses are responsible for family expenses and may be sued together or separately.||Utah 30-2-9|
|Vermont||Yes||None||Hitchcock Clinic, Inc. v Mackie, 648 A.2d 817, 819 (Vt. 1993)|
|Virginia||No||Spouses have liability for the emergency medical treatment for the other, including follow-up care as long as they are living together||Va. § 8.01-220.2|
|Washington||Yes||None||RCW § 26.16.200; § 26.16.205|
|West Virginia||No||Husband and wife are both liable for the reasonable and necessary services of a physician rendered to the husband or wife while residing together.||WV § 48-29-303|
|Wisconsin||No||A husband is liable for his wife’s medical expenses. A wife is not liable for her husband’s medical expenses.||Estate of Stromsted v. St. Michael Hosp. of Franciscan Sisters, 299 N.W.2d 226, 230 (Wis. 1980)|
|Wyoming||No||Parents are liable for family and children’s medical expenses.||Wyoming 20-1-201|
What can creditors go after?
Depending on the state, the type of debt, and marital status, it’s possible that a spouse could be held responsible for their deceased partner’s debt. Most of these rulings are based on the concept of either community property or common law.
The concept goes back to Visigothic Spain in 693. It’s based on the idea that couples invest equally in their union, regardless of wages or income, and that those marital assets are divided equally between them in the case of a death or divorce.
In states that recognize community property, each spouse’s assets are legally combined with the other person’s once they’re married. What’s yours is theirs; what’s theirs becomes yours. Therefore, any assets still owned by the surviving spouse could be potentially seized by the creditors. Fortunately, this is subject to certain limitations so creditors cannot take everything.
If a married couple acquires property while they are married, it is considered joint or communal property—even if only one spouse bought the asset in their name. Most states use the following criteria to define this type of jointly-owned property:
- Property acquired by persons while they are married
- The ownership of a home that is shared by a couple
- Properties that are difficult to distinguish as individual properties or joint properties
Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Puerto Rico. When splitting their marital property upon death or divorce, Alaskan spouses can choose community property or common law.
Community property exceptions: Separate property
It is possible to have separate, individual assets as a married couple in a community property state if it meets the following circumstances:
- Property obtained by a person or their spouse before marriage.
- Any property was acquired by a person or their spouse solely as a gift, inheritance, or benefit from a life insurance policy while married.
- The state’s common property law does not apply to money made while residing there.
- Property that was swapped for separate property or purchased separately with separate money.
Texas and Idaho are exceptions in that income from separate property acquired after marriage is considered community property. Every other state that recognizes communal property views it as separate property.
What if you’re not technically married? Defining a legal relationship
Common property law only applies through a legal marriage, with the exception of couples living in Texas. Otherwise, couples who are considered married under common law wouldn’t be affected by it.
However, that’s not to say that common law marriages are entirely exempt from the combining of assets. Long-term cohabitation may result in acquiring some property rights. This is done to ensure that the distribution of assets among other members of the household is fair—especially when a cohabitation arrangement resembles a traditional marriage such as when one person remains home to raise the children while the other goes to work each day.
In common law jurisdictions, each spouse is viewed as a separate economic entity. They are permitted to own property individually, without regard to the other spouse’s interests.
They’re also able to divide property ownership to put in one spouse’s name, as opposed to joint ownership. This can protect a couple’s assets and prevent one spouse’s property from being used to pay for the other’s obligations and liabilities.
Debt in common law states
In a common-law state, a debt would only be owed by both partners if it helps the marriage (i.e., the debt was for meals, garments, daycare, shelter, or essential household goods) or if the debt was jointly assumed, such as:
- Both partners signed an agreement obligating them to pay money on the debt
- Both partners’ names were on an account or title to the property
- A creditor used both spouses’ credit data before making the sale or loan
All other debts where that spouse’s name is on the title, such as a spouse’s business or auto loans, are regarded as separate obligations.
A spouse’s creditor in a common-law property state can only pursue the income, property, or joint property of the other spouse if the debt was accumulated for joint purchases or for purchases that were made for the family’s benefit. However, only half of the states that recognize common-law marriages permit this.
What can creditors take and how much?
Most states only allow creditors to seize half of the funds in a joint account. Certain common-law states allow creditors to seize joint property even if the debt was not family-related.
A creditor may only seize property held in “tenancy by the totality” by a married couple in order to satisfy joint obligations and not the individual debts of each spouse. Additionally, in certain places, like Florida, the majority of joint property is automatically regarded as being held in tenancy by the totality and is exempt from being removed to satisfy the debt of one spouse alone.
Deciding who owns assets
Putting ownership of family assets (home, bank accounts, etc.) in the name of one’s spouse is not uncommon for a doctor, CPA, contractor, or other professionals who have liability exposure (though most spouses in common law property states do not divide assets and instead, share ownership).
In states with community property laws, assets taken into the marriage or acquired by one spouse as an inheritance or gift might be kept as “separate” property. However, precautions must be taken to prevent the assets from being combined and automatically becoming common property.
One solution can be to utilize a living revocable trust because it avoids having to go through probate when a spouse passes away. Another way to protect them is to separate each spouse’s ownership of each asset. However, community property states can’t use this option since what belongs to one belongs to the other.
Common law marriage states
The following states allow for common-law marriages. Each state has different requirements for a long-term relationship to qualify as common law:
- District of Columbia
- Georgia (if the relationship began prior to 1/1/97)
- Idaho (if the relationship began prior to 1/1/96)
- New Hampshire (inheritance only)
- Ohio (if the relationship began prior to 10/10/91)
- Oklahoma (Conflicting laws, discuss with a family law attorney)
- Pennsylvania (if the relationship began prior to 1/1/05)
- Rhode Island
- South Carolina
Common law property states
41 states that follow common-law property rules in 2021, plus the District of Columbia:
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
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