What happens to any personal debt (school loans and credit cards) that are solely in my name if I were to die?

Question

I am married with no kids and have life insurance and have retirement plan benefits. I want to know for sure that if anything were to happen to me my wife would be fine financially. Is the personal debt that is only in my name such as remaining school loans or credit cards something that becomes an uncollectable debt or is that something transfers over to my wife? I would think that since it is only in my name she would not be responsible for them and they could not collect on the debt since I legally have no possessions or money since it is all immediately hers.

Answer 1

part of depends on whether or not you live in a community property state. in some community property states, your debt can become your spouses especially if they can prove your spouse benefited from the money you borrowed. as a side note, your creditors may be able to collect from your estate even if it doesnt go thru probate because your estate has value and you did owe the money. best for you to consider credit insurance and/or debt cancellation insurance in the event you check out unexpectedly.

call your local agent for assistance with estate planning, chances are he can help you to develop a sound strategy for asset protection financial security for your spouse. that's good peace of mind

Answer 2

Having worked as a banker for over ten years, the credit card debt would not become your wife's responsibility nor would the student loans. As long as she was only the authorized user and not a co-owner on the credit cards, banks cannot legally go after your wife. She did not incur the debt if the cards were based on your name and credit history.

They may try to collect from your estate once the monthly death tape is received, but if the estate was settled, there may not be any funds left. You should talk to an attorney and insurance agent to arrange your finances. At the very least you need a will.

Answer 3

Better talk to a lawyer about this. Your creditors can make claims against your estate, and it could be tied up in the courts for a long time. It's best to make provisions in your will to pay off all your outstanding debts from your estate, which would include your retirement plan benefits, but not your insurance (unless you name your estate as the beneficiary). Then you stipulate who gets the residue of your estate after all your debts are paid. Don't leave your wife to shoulder all these financial responsibilities if you don't deal with them in your will.

Answer 4

Well, there are many factors to consider. First of all, how much is your total debt? Second, what are your interest rates? If you have a manageable amount of debt and are able to obtain a loan at a lower interest rate then it may be advisable. However, ensure you pay the cards off immediately but do not close the accounts (and refrain from using them as well or you will defeat the purpose!)

Answer 5

I think you need to consult a professional. Laws change from state to state about certain things. Ur wife would not be responsible for ur student loans. I dont think she would be for your credit cards. The reason I mentioned the professional, is that when my dad died, my mom paid on his hospitol bill for years. Then she went to an attorney for something else and mentioned paying his debt. The attorney told her that she was not responsible for his debts that were not hers too. It may have been only on the med bills. It was a long time ago. Good luck and dont die for 8 more decades.

Answer 6

Back up cowboy, your possessions and money go first to your estate, the taxes and bills are paid and if anything is left over, then your wife gets it.

If she takes your assets and doesn't pay the debts, *she* becomes responsible for the debts.

Answer 7

You are not home free on your debts. Any debts left from your death will have to be paid out of the proceeds of your estate. I know this to be true as I was the executor of my deceased husband's estate. Every bill had to be paid, which in fact left me in debt.

Answer 8

Any debts in your name would become debts against your estate when you die. Yes, your wife would have to pay them. Make sure you make provisions for that in your estate planning.

Answer 9

Your estate is responsible for your debts. If there are insufficient assets to pay them, the debts are discharged. Surviving family are not liable for debts unless they are coborrowers or cosigners.