Question: “I have credit debt, but my wife isn’t a user on the card. What happens to my debt when I die? Will she be responsible?” I feel like that is more conversational and still fits the KW.
— Bill in Oklahoma
Howard Dvorkin answers…
First, I hope this is a general question and not something serious. If it is serious, I hope you recover, and I applaud you for thinking about others at such a time.
Second, the answer to your question depends on where you live, and on some other details as well. Let’s break it down.
Where you live
Nine out of 50 states are community property states. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin consider all the property and debt acquired in marriage to belong to both partners. That’s true even if only one spouse made money or lost money.
Fortunately, Bill, you live in Oklahoma. So that’s one less problem you must face.
What debts you have
I assume when you say “credit debt,” you’re referring only to credit cards and nothing else. It’s an important distinction because some debts are different after death. For instance, a surviving wife might be responsible for her deceased husband’s private student loans — even if they don’t live in one of those community property states.
How you set up that debt
If your spouse has co-signed any loan, they’re responsible for that debt. That goes for anyone, not just married couples. You mention that your wife isn’t a “user” of your credit card, but the more important question: Is it a joint card? Even if she doesn’t use it, if her name is on the account, she’s on the hook for the balance.
If this all sounds sort of vague, it’s intentional. When it comes to death and debt, there are loopholes and exceptions all over the place. Generally speaking, however, a surviving spouse isn’t obligated to pay the debts of the deceased spouse.
What to do NOW
Whenever I’m asked questions like this (and that’s often), I’m always glad when it’s not related to a serious illness. That means there’s still time to take steps now before we all face the inevitable. While planning for our own deaths is certainly not fun, it’s definitely important.
[For further information, check out What Happens to Your Debt When You Die?]
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.