Recently in Debt Category
Dear Liza: My brother died recently. He owned community property with his Wife. Is she now responsible for his debts? Most likely, yes. In community property states, debts incurred during the marriage are the responsibility of the community. So, after the death of a spouse, the surviving spouse is liable for those debts. I can't tell from the question whether or not your brother lived in a community property state, or in a state with common law rules, and signed an agreement making their property community. If so, it depends on what that Agreement actually says--sometimes Agreements specifically keep debt separate.
The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. (In Alaska, spouses can sign an agreement making their assets community property, but few people choose to do this.) The common law states are everywhere else. Nolo has a great article on this: "Debt and Marriage." Here's a helpful excerpt :
In states that follow "common law" property rules, debts incurred by one spouse are usually that spouse's debts alone, unless the debt was for a family necessity, such as food or shelter for the family or tuition for the kids. (These are general rules; some states have subtle variations in how they treat joint and separate debts.)
Scammers were extremely effective in gaining his trust, preying on his isolation to gain access to his confidential financial information. Worse, once he had gotten involved in a few of them, his name ended up on a "Sucker List" that was sold to other scammers, leading to an avalanche of other fraudulent offers.
One scam, in particular, has gained in popularity: a fake check, purporting to be an advance payment for winnings to come. The victim cashes the check, sends the cash to the scammer, and then is on the hook when the check bounces a few days later.
If your elderly relative is getting such calls and offers, here are some helpful tips from the article:
- Put their cell phone and landline on the FTC's Do Not Call Registry at https://www.donotcall.gov/.
- Call the AARP's Fraud Fighter Call Center at 1-800-646-2283.
- Put scam mailings into an envelope and forward them to the Postal Inspector-Suspected Mail Fraud -- no postage is required.
For more information on elder fraud and how to prevent it, see Long-Term Care, by Joseph Matthews (Nolo).
Specially trained agents are calling the heirs of the recently departed and politely asking them to pay up the outstanding balances on credit card debt, car loans, and the like. If an estate is filing an official probate proceeding, creditors have a process for filing claims against the decedent's property. But that's not who these collection agents are calling.
They're calling the relatives of people who have died who aren't in formal probate proceedings either because they had created living trusts during their lifetime or because the estate was too small for a probate proceeding.
Here's my advice: No matter how nice these people are (or well-trained), simply ask them why they think that you're legally responsible for the debt. In the vast majority of cases, you aren't obligated to pay them a nickel. It's true that married people can be jointly liable for debts, and creditors can try and get repaid from the property you've inherited from the decedent depending on your state's laws -- but that's their problem, not yours.
In fact, most estate planning attorneys can successfully get credit card companies and the like to accept a fraction of the outstanding balance on those debts that the survivors are responsible for, because these companies know just how hard it really is to collect anything on the dead's debts.
For a comprehensive guide to the legal, personal and practical aspects of administering a living trust, see The Trustee's Legal Companion, by Liza Hanks and Carol Elias Zolla (Nolo).