When a spouse dies, the surviving individual is not automatically liable for his or her remaining debts. Generally, an Ohio resident is only liable for a spouse’s debt if it was jointly held or if there was some sort of guarantee made on the balance. However, a surviving spouse may be indirectly liable for a debt because creditors could seize any assets that were supposed to transfer to that person. The living spouse would then receive a portion of that inheritance or nothing at all depending on what was owed.
Debts are prioritized after a person dies, and estate administration expenses are usually on top of the list. This is followed by funeral and related costs followed by the most recent hospital bills. Income, estate and other taxes owed are also among the top priorities after a person passes.
In some cases, assets may be off-limits as it relates to paying taxes or other debts unless approval is given at the state level. Even then, it may be necessary for an executor to think strategically when deciding which assets to use when paying off bills. This is true even when the estate has the ability to pay its debts in full.
Estate planning has many benefits for an individual regardless of his or her age. For instance, assets might be held outside of an estate to avoid probate. The use of a trust may also prevent creditors from seizing them to pay off any outstanding debt balances. When done properly, assets may be given to beneficiaries even if an estate owes money to the government or other parties. An attorney may be able to help a person create an estate plan that best meets their needs while alive and after passing.