What are my father’s options?

My father recently had a near death experience and now he wants to make sure that when he dies he doesn’t leave myself and my sisters with his debt. My parents are still legally married but have been separated for 20 years he does not want his debt to become my mom’s debt, either. He is disabled and brings in 1500 a month from his disability check. Prior to receiving disability he had accumulated tens of thousands of hospital bills and no way to pay them. He currently has Medicare for current and future medical bills. He is worried about how that may affect us when he dies. He also owed back taxes, which to my knowledge, has been cleared. He rents an apartment and owns a 25 year old car, he has no assets. About 6 years ago, his girlfriend at the time opened a credit card in his name that he wasn’t aware of to the tune of 5600.00. I do not believe he is being held responsible for this debt, but still he is worried. What can he do to ensure we won’t be responsible for his debt?

Asked on January 2, 2018 under Estate Planning, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

1) If he and your mother are separated, they may need to formally divorce. Otherwise, it is possible she could be liable for certain "necessary" expenses, such as his medical bills, even if they are not living together and are separated. The law requires spouses to provide for certain basic, critical expenses for each other. It can be difficult for the creditor to hold her liable, since they have to establish that they tried and failed to collect from the patient himself and also that the expenses were necessary, but it is a possibility. Your mother should at least discuss the matter with a family law attorney to understand her liability for his medical costs; she can then decide on the best course of action.
2) No person is responsible for any other debts of another, even a parent or spouse, unless he or she voluntarily agreed to be responsible for them (i.e. co-signed or guaranteed them), at least in a non-community property state, like New Jersey. (In one of the community property states, like CA or AZ, a spouse is liable for 1/2 of all debts incurred during marriage; but since you indicated that the state in question here is NJ, that should not be an issue.) So his debts will not become yours or his wife's except for the possibility that she could be liable for certain necessary medical expenses (see above). You will not be liable for his debts; debts are not inherited.
3) However, his "estate," or the assets he leaves behind, will be liable for his debts--medical, credit card, rent if he falls behind on it, back taxes if any were not cleared up, etc. Creditors could seek to get paid from his estate and could therefore get some or all of any money (or other assets; e.g. the car) he is leaving behind. But they can't get more than he is leaving behind--that is, family, heirs, etc. do not have to pay his debts with their own money. The worst that could happen (other than the medical debt issue for your mother, discussed above) is that  no one inherits anything from him, because creditors get it all. If he doesn't have much in the way of money, so there really is little at risk (which appears to be the case based on what you write), there is little to worry about.


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