Jan 17, 2025
Dealing with a loved one’s terminal illness is never easy, but one Kansas City man’s struggles have been amplified by the recent discovery of financial infidelity.
“My wife is about to pass away and she hid debt from me,” 52-year-old Daniel said on a recent episode of The Ramsey Show. His 44-year-old wife suffers from liver cirrhosis and doesn’t qualify for a transplant, which has compelled her to reveal uncomfortable secrets for the first time.
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Daniel says she owes $15,000 in student debt, although his in-laws claim the amount could be as high as $50,000. “I didn’t know this, because she’s hidden a bunch of stuff from me,” he sighs.
Besides the loans, he says he was also unaware until recently about her two bankruptcy filing during a previous marriage.
“There’s a mountain of deception here,” the show’s host Dave Ramsey observed. The tragic story highlights the emotional and financial impact of financial infidelity in relationships.
The costs of financial infidelity
Money-related betrayal is unfortunately common. A recent Bankrate survey found that roughly 42% of U.S. adults who were either married or were living with a partner had kept a financial secret from them. And 30% of respondents said they hid spending that was higher than their partner would be comfortable with, while 23% had accumulated debt without their partner’s knowledge.
Common types of financial infidelity, Bankrate found, include secret savings accounts, hidden credit cards and undisclosed checking accounts. The major reasons survey respondents cited for keeping financial secrets were “a need for financial privacy or control over their own finances” (37%), a lack of desire to share (33%) and embarrassment over their money management habits (28%).
But these lies (or omissions) can take a serious toll on a relationship.
“Financial secrets can take on a life of their own and undermine the relationship,” Ted Rossman, Bankrate’s senior industry analyst said.
“In years of studying this, we’ve often found that the breach of trust has a greater impact than the dollars and cents. If you have a secret spending habit or undisclosed debt or a credit card or bank account that your spouse doesn’t know about, I think it’s best to come clean right away.”
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However, given his wife’s terminal illness, Daniel appears more focused on the financial aftermath of her debt after her passing than the impact of her betrayal. Thankfully, Ramsey eases his concerns.
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Simple solutions
Regardless of the actual amount, Ramsey believes Daniel’s personal finances will be insulated from his wife’s debt. “Student loan debt that is federally-insured is forgiven when someone passes away,” he explains.
Indeed, the Federal Student Aid office confirms that “loans will be discharged if the borrower or the student on whose behalf a PLUS loan was taken out dies.”
While Daniel isn’t sure if his wife’s loan is federal, it’s highly likely to be. A whopping 91.2% of all student loan debt is federal, according to the Education Data Initiative, and only 7.57% belongs to private borrowers.
In the unlikely situation that these loans are private, Ramsey recommends reaching out to a probate lawyer to see if his wife’s assets could be used to pay off the loan.
“In most states, when someone passes away what they own stands good for what they owe and nothing else does,” he explains. “Just because you're married to her, in most states, does not mean you're liable for her debts.”
Both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) confirm that a spouse or a family member is not personally liable for the debts of a deceased loved one under most circumstances. Nevertheless, if you’re dealing with the financial affairs of a recently deceased loved one or planning the estate of someone with a terminal illness, it might be a good idea to reach out to legal and financial professionals to guide you.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
