The death of a spouse is one of the most emotionally devastating experiences you can go through. The loss of a mate will also inevitably affect your finances. Many factors will determine how the death affects your money and credit, including whether your spouse had life insurance, any outstanding debts, assets and a clear will.
As you negotiate the complex world of probate, here are some common questions you might have:
Am I responsible to repay debt my spouse and I incurred jointly?
In most cases, yes. If you and your spouse entered into a debt together during the course of your marriage – such as a mortgage – or both your names appear on a credit account (such as a joint credit card), creditors will likely hold you responsible for the balance of the debt in the event your spouse passes away before the debt is repaid. Remember, failing to pay a debt you owe could cause the creditor to take action against you, and collections and judgments will appear on your credit report.
Am I responsible for my spouse’s individual debts?
That depends. If the debt is something you incurred jointly during your marriage, creditors will likely view you as responsible for continuing to pay the debt. You may also be responsible for a deceased spouse’s individual debt if you co-signed a loan or credit agreement, or live in a community property state, according to the Consumer Financial Protection Bureau (CFPB). If you’re unsure of your legal obligations regarding a debt, the CFPB advises you talk to an attorney knowledgeable about your state’s probate code.
What do I need to do about my spouse’s credit?
It may be necessary to obtain a copy of your late spouse’s credit report. As his or her surviving spouse, you can mail a letter to the national credit bureaus notifying them of your spouse’s passing, requesting a copy of the credit report and asking that they make a note on the account of the death. The notation on the account could help reduce the risk of your spouse’s identity being stolen.
If I close my spouse’s credit accounts, will it affect my credit?
Joint credit accounts impact both your and your spouse’s credit reports. Closing a joint account after a spouse has died could change your ratio of credit available to credit used – one of the factors that help determine your credit scores according to many credit scoring models.
It’s been years since I had my own credit account. How can I rebuild my solo credit?
If your spouse held all the family’s credit in his or her name, you’ll need to take steps to re-establish your own independent credit. Creditors with whom you and your spouse held a joint account may require you to re-apply for credit on your own.
Paying bills on time, holding down debt and paying off credit card balances in full every month can all be good for your credit. You may also consider opening a small, manageable credit account – such as a credit card – in your own name and pay it off every month so you begin building individual credit history.
My spouse left me plenty of money to live on. How will that affect my credit scores?
Income and assets are not among the factors that go into determining your credit scores, so how well off your spouse left you won’t directly impact the scores you see. However, plenty of assets and income can make it easier to stay on top of bills, and paying your debts on time can positively influence your scores.