Dear Counselor: Husband’s debt lives on after death

Question: My husband passed earlier this year. For the past 37 years of our marriage, he was the one who dealt with all the finances. I wasn’t completely in the dark about what was going on, but I didn’t review and track every transaction the way he did.

A few months after his death, my late husband’s brother made a comment about money that my husband had borrowed from him. I knew that my husband had borrowed money from his brother, but I assumed that we had paid it back. I was incorrect. Since his passing, I have gone back to review and organize our bank statements and other financial documents. From what I can tell, it looks like my husband received a number of checks from his brother that were identified in the memo lines as “loans.” But I haven’t seen anything where we paid him back.

It’s possible that he paid his brother back, but I just don’t know. If he didn’t pay him back, the loan balance would be substantial. Am I now responsible for paying these “loans” back? I never signed anything or even knew about the loans. So far, his brother hasn’t said anything to me about actually repaying them, but I am anxious about what happens if he does.

At this point, I really can’t afford to pay back these loans, but I fear that not paying them back will create problems in our family. What should I do?

Answer: Fortunately, it doesn’t sound like your brother-in-law is outside your door with a baseball bat waiting to collect. Your brother-in-law’s silence may reflect an awareness of your situation and a decision on his part not to seek repayment. Nevertheless, your anxiety about the debt is understandable because you may be legally responsible for it even though you never signed anything or were even aware of it.

Your first order of business is to see what the actual obligations are. Are you aware of any promissory notes or other documents that spell out the terms of the loans? If there were any writings evidencing the debts that your husband owed, you should review them carefully to see what they say.

Your husband presumably used the funds for the benefit of the two of you — the marital community. If the property was used for the benefit of the community, it is characterized as community debt. Regardless of whether you signed a loan document or even knew about it, the creditor may be able to collect the debt from your community property. You were in a fiduciary relationship with your spouse, and the law will presume that the two of you disclosed the material terms of any transactions to one another.

Your brother-in-law has a limited window of time in which to enforce the loans taken by your deceased husband. A creditor has only one year from the date of the debtor’s death to take legal action against the debtor. In other words, if one year passes since your husband’s death, and your husband’s brother doesn’t file a lawsuit to collect the debt, then he will not be able to take you to court to seek repayment of the debts.

However, it doesn’t sound like your brother-in-law is interested in taking you to court. If that is the case, then you may want to leave things as they are. The loans may be rendered unenforceable by the passage of time.

Your desire to keep this from creating any division in the family is commendable. But you should wait to see if these loans are, in fact, creating a problem. If they are, then you can and should address the issues at that time. If you can’t repay the loans from your current income, then maybe you could explore other ways of repaying — i.e. having your estate repay your brother-in-law should you predecease him.

Wait to see how this situation plays out for both you and your brother-in-law. It may blow over without any need or expectation for repayment.



Preston Morgan is a partner at Kopper, Morgan & Dietrich, a Davis law firm providing family law, estate planning and trust litigation representation. His column is published every other week in the Davis Enterprise. To pose a question to Preston Morgan, contact him at https://kopperlaw.com.

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By |2019-01-09T18:33:50+00:00December 6th, 2018|Dear Counselor|Comments Off on Dear Counselor: Husband’s debt lives on after death