When a spouse or other family member dies, survivors must often deal with unexpected issues and decisions while they are still coping with grief over their loss. Financial matters are high on the list of concerns with which a surviving spouse or family member may be confronted. Knowing what to expect ahead of time can take some of the anxiety out of this aspect of coping with a death in the family.
Credit Card Debt
In a community property state--Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin--unsecured debts acquired during a couple's marriage are considered to be held jointly, and the surviving spouse is responsible for repayment. In other states, a surviving spouse is only liable for credit cards that bear his name, either alone or with the deceased spouse. The surviving spouse is also responsible for the repayment of any debt for which she co-signed. Even in a community property state, loans that predate the marriage are not considered to be the responsibility of a surviving spouse. A spouse is not liable for the unpaid balance on student loans. If a student loan was originated by a parent, the loan is discharged upon the death of either the parent or the student.
A surviving spouse should continue to meet obligations such as mortgages, car payments, and utility bills, whether or not his name was attached to the original loan. When a spouse's name is not already on a title or mortgage, she should have the title changed to her name, and should maintain good credit by keeping payments up to date. Changing the name on a mortgage or title is usually a simple matter involving little expense. The required documents, such as marriage and death certificates and existing title, should be brought to the appropriate state office for changing and recording titles or deeds. Surviving adult children are not obligated to pay a deceased parent's mortgage, unless the child owns the property jointly with the parent. In some cases, the deceased person has a mortgage insurance policy which pays the balance of the mortgage.
An adult child is responsible for a deceased parent's medical expenses only if he is listed as a guarantor for any expenses not covered by health insurance. However, a family member who has signed an agreement to guarantee payment of a medical bill will be held liable for those charges. A surviving spouse is responsible for unpaid medical bills only in community property states, or in other states if she has agreed to guarantee payment.
As of 2010, the cost of an average funeral was $7,323, according to the National Funeral Directors Association. This figure does not take into account the cost of the burial plot, monument, and extra expenses like flowers. Although the payment of funeral expenses typically falls to surviving family members, it is frequently covered by the deceased person's life insurance policy.
The estate of a deceased person is responsible for her income taxes for the year of death; normal filing deadlines apply. In addition, a federal estate tax is owed on estates that exceed a certain value which varies from year to year. In 2009 that figure was $3,500,000. State death taxes are due only when a federal estate tax is owed, and some states also levy a state inheritance tax. These taxes are paid from the deceased person's estate; survivors are not held liable for taxes connected with the death of a family member.