Most of your debts will live on after you die, but states and the federal government stand by with numerous laws that govern who has to pay them. Your liability for a loved one’s credit card debt and other unpaid debt after their death depends on your relationship with them, the state in which you live and the type of debt. But family members are not liable in most cases. They don’t have to pay them with their own money or assets.
The Estate Inherits Debts
A deceased person can’t legally own property or owe money, so a person’s assets and debts pass to their probate estate when they die. An exception exists for assets that can transfer directly to a living individual by some other means, according to the Maryland Volunteer Lawyers Service. These can include those with transfer- or payable-on-death designations, real estate held as joint tenants with rights of survivorship or assets held in a living trust. Assets titled in these ways never become part of the probate estate.
The estate is responsible for paying the decedent’s debts from the assets that pass into the probate estate, liquidating them if enough cash isn’t available.
The Executor’s Responsibility and Liability
The executor of an estate, sometimes referred to as the administrator or personal representative, is the individual who’s appointed by the court to settle the decedent’s probate estate. As part of the probate process, their job is to gather up and make an inventory of all the deceased’s assets and alert their creditors that the individual has died. Requests for payment must be officially made to the estate by a certain date. They then pay the creditors from the estate’s assets.
A deceased person can’t legally own property or owe money, so a person’s assets and debts pass to their probate estate when they die.
InCharge Debt Solutions indicates that an executor can’t be held personally responsible for the deceased person's debts unless they mismanage the estate in violation of state law. This might be the case if the executor sells the decedent’s automobile and gives the money to a beneficiary prior to paying off the car loan.
Exceptions to the Probate Rule
Payment-through-probate is the general rule for a decedent’s debts, but there are some exceptions, according to the Consumer Financial Protection Bureau.
You can be held responsible for a debt if you cosigned on it with your deceased loved one, or if you’re a joint account holder on a credit card account. You’ve accepted equal responsibility for the debt in these cases, so the duty to pay it simply transfers to you. The CFPB indicates that this rule doesn’t apply to authorized users on credit cards, however.
Surviving spouses can also be held responsible if they live in a community property state that treats all marital assets and debts as being owned and owed jointly by spouses. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin as of 2022. Some states additionally hold surviving spouses liable for certain types of medical debt incurred by the deceased.
Estate Doesn’t Have Enough Money
Most states require that all a decedent’s debts must be paid before an executor can make bequests from a probate estate to its beneficiaries. But it sometimes happens that an estate doesn’t have enough assets or cash to pay all of them. These are referred to as “insolvent estates,” according to the IRS.
The Federal Trade Commission indicates that some debts will go unpaid in this case. Beneficiaries will likely receive nothing from the estate because all cash and available assets must be liquidated to pay the deceased’s creditors to the extent possible.
Help With Debt Collectors
The federal Fair Debt Collection Practices Act sets some firm rules regarding who creditors and debt collectors can contact regarding the debts of a deceased individual. They cannot demand payment or threaten legal action, according to the CFPB, except from an estate’s executor or co-debtors or co-signers. They can’t identify, discuss or divulge the details of a debt to anyone, again with the exception of the estate’s executor or a co-obligor.
Family members have a legal right to instruct the creditor or collection agency that they must not contact them again, but this must be done in writing. You might want to take the precaution of sending them notice by certified mail, return receipt requested, so you can prove that the creditor or agency received it.
You can also report them to the Federal Trade Commission at ReportFraud.ftc.gov or contact your state’s attorney general.
- Federal Trade Commission: Debts and Deceased Relatives
- Consumer Financial Protection Bureau: Does a Person’s Debt Go Away When They Die?
- Consumer Financial Protection Bureau: Can I Be Personally Responsible for Paying My Deceased Relative’s Debts and Can a Debt Collector Contact Me About Those Debts?
- Maryland Volunteer Lawyers Service: Estate Debt: Are You Liable?
- InCharge Debt Solutions.org: Is the Executor Responsible for Paying Off Credit Card Debt?
- IRS: 5.5.2 Probate Proceedings
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.