One of the questions I get regularly is this one (or something similar):
My mother has a credit card in only her name. If she passes, will my father have to pay her debts?
It depends. With credit cards, the cardmember agreement usually protects a spouse or child from having to pay someone else’s debt — as long as that someone else doesn’t have his or her name on the account. With other types of debt, it depends on the laws of the state, as well as the way the loan was set up.
It is important to note, though, that even if you aren’t personally liable for the debts of your spouse or your parents, the estate is. This means that creditors can file claims against the estate to get what they are owed. If there isn’t enough money to go around, then some of the estate’s assets can be sold, and creditors may receive a reduced amount. As you might imagine, this debt is a drain on the estate, and it can reduce one’s inheritance.
In such situations, it is often a good idea to consult with a financial professional or a tax professional, and a knowledgeable attorney to get a good idea of what your options are.