I get this question all the time from the married and soon to be married: “Am I responsible for my spouse’s debt if my spouse dies first?” Very important question whether you are putting your affairs in order, preparing for marriage or seeking to better understand the state of your family’s financial health. You should have a clear picture of the amount of individual and joint debt your family is carrying. Additionally, you should know the potential impact to your household in case of loss of income, incapacity or death. Knowing the good, the bad, and ugly in advance can help you plan better.

Generally speaking, you are not responsible for your spouse’s debt. That is, if the debt is solely in your spouse’s name and you are not a cosigner or joint debtor on the loan. However, that’s not the entire story.  While you may not be personally responsible for the mortgage on the family home or the car loan left behind by your spouse, you should really ask yourself: “Will I be able to continue living in my home or driving my car if my spouse dies first? Will I qualify for a mortgage or loan in my name? Can I afford the monthly payments? Is there enough insurance to pay off the debt? If I had to sell the family home, could I afford to move someplace else?”

These are very important questions that we typically gloss over or fail to discuss with our spouse because we see it as the other person’s debt. We fail to realize that our spouse’s individual debt may impact our lifestyle, depending upon how our assets are organized. I’ve counseled one too many spouses over the years who ended up having to sell the family home after living there for over 30+ years and needing to start over because there wasn’t a plan in place to deal with the mortgage encumbering the family home. A very sad place to be, but also totally avoidable with advance planning.

During the estate planning process, I encourage clients to evaluate their household debt and identify strategies to minimize the potential impact of debt left behind on the surviving spouse’s lifestyle. These strategies may include putting a plan in place to actively pay down and pay off the existing debt, not taking on new debt, identifying funds that would be available to potentially pay off debt, evaluating whether the surviving spouse would be able to qualify for a loan or developing a plan for the sale of the asset at death and relocation of the surviving spouse, if needed. Remember, life requires planning at every stage and don’t simply believe the hype that your debt dies with you. There may be unintended consequences for your spouse who is left behind.