Dear Penny: My Best Friend Died. Is Her Husband Liable for Her Secret Debt?

A man looks stressed as he looks at debt next to his laptop.
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Dear Penny,

My best friend was recently killed by a drunk driver. I’m helping her husband sort everything out, and we’ve discovered she was hiding credit card debt. She also had several student loans he didn’t know about. 

His name wasn’t on any of it. Is he liable for these debts?

-Picking Up the Pieces

Dear Picking Up,

What a senseless and heartbreaking loss. I’m glad the two of you are supporting each other at this awful time.

In all likelihood, your friend’s husband won’t be responsible for the money she owed. When someone dies with debt, the debt becomes part of their estate. Family members aren’t responsible for paying it off, though there are a few exceptions I’ll discuss in a moment. If the estate doesn’t have enough assets to pay off the debt — and I’m guessing your friend died without much money if she was carrying secret debt — creditors typically won’t get paid.

Dear Penny

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All that gets sorted out in probate court. However, some assets avoid probate altogether and go directly to the person listed as a beneficiary. For example, if your friend had a life insurance policy or a retirement account and named her husband as a beneficiary, the money would go directly to him. Creditors wouldn’t have a chance to claim these assets during probate.

Now for those exceptions I mentioned: Anyone who was a joint owner on an account or who co-signed can still be on the hook for a loved one’s debt when they die. Clearly that’s not the case here.

The other scenario where your friend’s husband could be liable for this debt is if they lived in one of the nine states that follow community property law — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In community property states, creditors can go after someone for their spouse’s debt if it was acquired while they were married.

This applies even if the spouse was unaware of the debt. However, creditors can’t sue someone for debt their spouse racked up prior to the marriage.

If your friend’s husband has questions about whether he’s responsible for any of this debt, he really needs to consult with an attorney. Keep in mind that even if he isn’t obligated to repay it, he may still get calls from debt collectors. If that happens, he can send them a certified letter requesting that they cease contact. Collectors could still pursue claims against the estate (or possibly her husband if he’s in a community property state), but at least that will squelch the flood of phone calls.

Her husband may also want to notify the credit bureaus of her death. That way, the credit bureaus will flag her accounts and note that she is deceased. He can report her death to just one of the three bureaus, which are Equifax, Experian and TransUnion. He can do so on one bureau’s website. The bureaus will share this information with each other, so he only needs to do this once. Taking this step can prevent identity thieves from taking out additional debt in his wife’s name.

My heart goes out to you and your best friend’s husband. Hopefully, the financial fallout won’t be too complicated to resolve so that her husband can focus on his grief.

Trying to climb out of debt? Here are 50 ways to bring in extra money this month.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].