When someone dies, their bills don’t generally become yours, but the wrong step can make them yours. In this episode, Jill Mastroianni breaks down what really happens to debt after death, when you can walk away, when you can’t, and why the order in which you pay bills matters more than the amount you owe.
Using a real client story, listener Tracy’s question from Virginia, and clear legal examples, Jill explains how fear, grief, and misinformation lead people to pay debts they don’t legally owe, and how to protect yourself instead.
What You’ll Learn in This Episode
1. The general rule: You are not personally responsible for a loved one’s debts, even if you’re the surviving spouse. That doesn’t mean the estate isn’t responsible. It just means creditors usually can’t come after your money.
2. The four exceptions that can make you personally liable. You may be responsible if: (i) You co-signed the debt, (ii) You are a joint account holder (not just an authorized user), (iii)You’re a surviving spouse in a “Doctrine of Necessaries” state, or (iv) You’re a surviving spouse and you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin)
3. Student loans: what dies and what doesn’t. Federal student loans are discharged at death. Private student loans depend on the contract. Private student loan co-signers may be released on the death of the student borrower only if the loan was signed on or after November 20, 2018.
4. Why even “non-probate” accounts can be pulled back. In Virginia, joint and P.O.D. accounts can still be used to pay estate debts if probate assets run out. This means “avoiding probate” does not always mean “protected from creditors.”
5. Who gets paid first when there’s not enough money. Each state sets a strict priority order.
Resources & Links
The Death Readiness Playbook: www.deathreadiness.com/playbook
Code of Virginia § 64.2-528. Order in which debts and demands of decedents to be paid.
Code of Virginia § 6.2-611. Liability of surviving party for debts and other liabilities of decedent's estate.
Code of Virginia § 64.2-309. Family allowance.
Code of Virginia § 64.2-310. Exempt property.
Code of Virginia § 64.2-311. Homestead allowance.
Discharge Due to Death | Federal Student Aid
Economic Growth, Regulatory Relief, and Consumer Protection Act. Public Law 115–174—MAY 24, 2018, 132 STAT. 1296
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This podcast provides estate planning guidance for women and discusses real, practical issues, from caregiving, pre-planning a funeral, how to avoid probate using beneficiary designations, planning for individuals with special needs (and special needs trusts), whether you need a professional fiduciary (trustee or executor), how the estate tax works and how to preserve your legacy.
Tuesday Triage episodes answer questions from listeners like you, from powers of attorney, healthcare advance directives (and whether they work when you’re pregnant), what a Last Will and Testament really is, whether you need a trust, how Medicaid works and how to have senior and elder care conversations and how to care for aging parents.
Disclaimer: This podcast and all related content are for educational purposes only and do not constitute legal advice. No attorney-client relationship is established here. Use of this information without careful analysis and review by your attorney, CPA, and/or financial advisor may cause serious adverse consequences. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state.
