How to Avoid Mistakes with Debt After Death

Written By Jillian Mastroianni

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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Jillian Mastroianni
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