Money Talks News: Debt After Death

We all know when a person dies, where there's a will, there's a way: for their worldly possessions to pass on. But what about their debt?

When someone dies with debt, it's not uncommon for creditors to try to collect from those they leave behind. But are you responsible? Well, that depends. Let's look at a few common scenarios.

First, you're not generally responsible for someone else's debt when they die. Unless, that is, it's a joint account. In that case, both parties are responsible for the entire debt. So if one dies, the other is on the hook. If you're just an authorized user on someone else's account, you're not responsible for their debt.But don't use that credit card after the death or you could be liable or even charged with fraud.

But unpaid debt doesn't die when the deceased does. The estate is still liable.That's why the executor or administrator should get a copy of the credit report to see what's owed. Only after those debts are paid, can the estate start distributing the cash, the antiques, the jewelry.

"This is a legal process and if you were to give everything away, for example, and then find out about a debt that's owed, it's possible that people who received part of the estate could be responsible for those debts."

And that's how it works: When a person dies, their estate is born. And that estate settles up: it pays its debts, then distributes what's left to the heirs.If there's not enough to pay the debts, the lender loses.

Those are the short strokes, but this stuff can get complicated, especially in community property states. But the bottom line is this: don't pay debts you don't owe, and when it doubt, talk it out - with a lawyer.For more information, go to and search for "Debt after death."For Money Talks News, I'm Stacy Johnson.

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