Will My Mother be Responsible for My Father's Debts?
Q.
My father has been diagnosed with a terminal illness. I am sorting out his financial affairs and have a question regarding this. He seems to be under the belief that any debts he owes in his name only will become void on his death and my mother will not be liable for them. She will thus only be liable for those in both their names. This doesn't seem correct to me. Can you help clarify?
A.
First of all, please accept my sincerest wish of peace for you and your family as you go through this difficult time. Coping with terminal illness is never easy for patients, nor for those who are dearest to them.
Your father may be right, depending on a number of factors. The specifics can be quite complicated, especially when a couple owns some property jointly, as I assume is the case with your parents. Basically, if a person dies leaving assets, such as equity in a home or a life insurance policy, those funds are used to pay off debts before any remaining assets can be distributed in accordance with the person’s will.
What that can mean for married couples is that although some loans may not be in both names, the surviving spouse’s portion of their inheritance may be reduced by the amount of the outstanding debt of the deceased. If no such assets exist, the remaining spouse is not held accountable for debts that are not in his or her name.
Obviously, responsibility for joint loans falls to the survivor, should one of the pair pass away, as both agreed to be wholly accountable when they initially took on the debt. Additionally, in cases where a spouse (or another) acts as a guarantor against a loan, they must assume full responsibility for paying back the money if the indebted person becomes unable to continue making payments for any reason, including death.
When assets from an estate are distributed, there is a proper order in which outstanding debts are to be paid before any leftover is dispersed. Mortgages are first, then rental amounts that may be in arrears, water rates, council tax, fuel, credit cards or other personal loans, and lastly, overpaid benefits or outstanding taxes. Because each person’s personal asset portfolio is unique, it is always wise to seek the advice of a solicitor specialising in will and probate matters to be sure that things are handled appropriately. Additionally, by seeking legal counsel, your parents may be able to make financial decisions now that are designed specifically to leave your mother in the best possible position after your father’s passing.
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