WHAT HAPPENS TO DEBTS
WHEN A SPOUSE DIES?
By: James M. Bright, Attorney at Law
The following is provided for informational purposes only and is not, nor should it be construed as legal advice.
One of the common questions asked me in my practice by surviving spouses is, “which, if not all, of my deceased spouse’s debts am I personally liable?”
This question typically has more facets than can reasonably be discussed in the limited space allowed, but a basic understanding of how these debts are classified can at least offer a beginning in understanding.
There are five potential classifications of property held during a marriage which can be meaningful after the death of a spouse.
Property can be:
- Separate property of the deceased spouse;
- Separate property of the surviving spouse;
- Community property subject to the joint management of both spouses and referred to in this article as “joint community;”
- Community property subject to the sole and separate management and control of the deceased spouse, referred to in this article as “deceased’s special community;”
- Community property subject to the sole and separate management and control of the surviving spouse, referred to in this article as “survivor’s special community.”
The first step in classification of property is to establish if it is community property or separate property.
The Texas Family Code in §3.002 provides us with a rather simplistic definition of community property as being “. . . property, other than separate property, acquired by either spouse during marriage.”
Separate property for purposes of this discussion shall mean that which is acquired by either spouse prior to marriage or by gift or by inheritance. This is a general definition only.
At the time of the death of a spouse, separate property is classified as either:
Separate property of the decedent – This property will always be liable for the debts of the deceased; or
Separate property of the surviving spouse – The separate property belonging to a surviving spouse is not normally subject to the debts of the deceased spouse unless liability is established by other rules of law.
Community property may be divided into three separate classifications as follows:
Deceased Spouse’s Special Community – This property is community property which was subject to the deceased spouse’s sole management and control is liable for debts incurred by the deceased spouse.
Surviving Spouse’s Special Community – This property is community property which was subject to the surviving spouse’s sole management and control. It is not liable for separate liabilities of the deceased spouse incurred before marriage or for non-tortious liability that the deceased spouse incurred during the marriage, unless both spouses have been made personally liable by particular acts. Those acts include liability incurred when the deceased spouse was acting as the agent of the surviving spouse or when the deceased spouse incurred a debt for “necessaries” as are described by statute. For example, a surviving spouse’s special community might be liable for debts incurred to care for or improve the community, but it probably will not be liable for the debt incurred for some type of personal use that provided no benefit to the community. These “necessaries” are more fully documented by statute.
Joint community property is that property which was under the joint management of both the decedent and the surviving spouse. This property will be subject to liability claim against the estate of the deceased spouse.
There are three specific constitutional and statutory protections which are further offered to a surviving spouse and are as follows:
The Texas Constitution continues to exempt the homestead from claims of Decedent’s creditors. The surviving spouse is given an exclusive right to occupy the homestead so long as he/she elects to do so, even if the homestead is the separate property of the deceased spouse.
Exempt personal property, including furnishings, automobiles and personal effects in an amount that does not exceed $60,000.00, may be protected from creditors of the deceased.
Family allowances may be granted in addition to the homestead and personal property exemptions. This allowance is paid out of the decedent’s property and may be established by the probate court for one year’s maintenance of the surviving spouse and, if applicable, minor children. This amount of a family allowance is set at the discretion of the probate court, but should not be allowed if the surviving spouse has a sufficient separate estate to pay those living expenses.
It should also be noted that careful notification of creditors pursuant to statute may reduce the overall debt burden by taking advantage of statutory shortening of statutes of limitations for creditors to act.
Obviously, when a spouse dies leaving a large number of debts, there can be serious consequences, but these concerns can be addressed, and many times the seriousness of the consequences can be avoided by working closely with an attorney of your choosing who is familiar with these subjects.
James Bright is admitted to practice before the Federal Courts for the Southern District of Texas and Eastern District of Texas as well as all of the Justice Courts, Probate Courts, County Courts at Law, District Courts, Courts of Appeal and Supreme Court for the State of Texas. He maintains an office in Houston and by appointment another at 208 McCown Street in the heart of historic Montgomery. Contact may be made by telephone (936) 449-4455 or (281) 586-8277. For more information about wills or probate in Texas, please see- www.houstontxprobate.com