An article by our probate and trust litigation partner Lynda Chung, “The Impact of Spouse’s Death on Married Couple’s Community Property and Debts,” was published in the February 19, 2021 issue of the Korea Times.
A version of the article was previously published in the journal of the Korean-American CPA Society of Southern California.
Lynda’s article discusses what happens to the debts of a married couple when a spouse dies.
These issues include whether a creditor can collect from the surviving spouse, and what property becomes an asset of the surviving spouse due to the right of survivorship or pursuant to the couple’s estate planning instruments.
As Lynda explains, a surviving spouse can face different exposure, depending on the nature of the debt.
For example, if the deceased husband purchased a sports car and dies without paying off the loan, only the community estate is liable for the car loan.
However, if a caregiver hired by the couple who took care of the husband now claims to be owed unpaid overtime wages, the creditor/caregiver may be able to reach the widow’s separate property as well as their community property, under the “necessaries of life” exception.
At a time when a surviving spouse is dealing with the loss of a loved one, the financial and legal woes left behind by the decedent can be a serious burden – but, Lynda points out, one that can be avoided with good planning.