Some of the most frequently asked questions that I field from clients and beneficiaries relate to the financial aspect of their loved one’s estate. Many family members want to know how much they’re getting and where the rest of the money is going. Once an executor or an administrator is appointed, they want to know what happens with estate debts (credit cards, car loans, etc.). There’s a lot of misinformation out there regarding debts and estates. Many people think that because someone has passed away, it will be possible to avoid paying these debts. That’s not the case. You personally, and the beneficiaries, are not responsible for debts, but you do have to pay estate debts if there are enough estate assets with which to pay them. Other things that people ask about have to do with access to funds. If there’s a bank account, can they access those funds? Yes, but only if it was a joint bank account with the person who passed and they were jointly held. One thing is clear: You certainly should not use their credit cards. Unfortunately, you may have to wait until you’ve been appointed as the representative on behalf of the estate to act. Once you have access to funds, you can start paying bills. Usually, it’s possible to negotiate some of the bills down based upon the amount that’s in the estate or how much money is currently available. This is particularly true of credit card bills. One of the last things that you’ll work on as an executor or estate representative is paying the beneficiaries and yourself. Executors are entitled to a commission, which gets deducted prior to releasing any funds to the beneficiaries. We suggest that you have beneficiaries sign what’s known as a receipt, release, and waiver. This releases the estate, as well as the executor, from liability. Prior to signing this, beneficiaries will want an informal accounting of the assets and liabilities of the estate. That lets them know how much was in the estate, how much the debts were, what is left, and then everyone can see that they’re receiving their fair share. The last step is to file an inventory with the court that shows what was received in terms of different types of assets, whether they were real property, whether there were cash accounts, annuities, life insurance, and things like that. That becomes a permanent record with the court so that if anybody wanted to look at the public record, they could see where the funds from that estate came from. These are just some of the issues that come up on a regular basis. Estates can become much more complex. This is a simplistic view. If you have other questions, I have 31 years of experience handling estate matters, and I’d be happy to help you with any of them. James F. Leonick
Leonick Law, P.L.L.C.
TEL: (631) 486-9500
Email: info@LeonickLaw.com
FAQs
Do I Have to Pay My Deceased Parents' Credit Card Bills? - Leonick Law? ›
You personally, and the beneficiaries, are not responsible for debts, but you do have to pay estate debts if there are enough estate assets with which to pay them.
Do you have to pay a deceased parents credit card bill? ›The executor of the deceased person's estate is responsible for paying off any debts before distributing other funds or assets to heirs.
Do credit card balances have to be paid after death? ›Unfortunately, credit card debt isn't wiped clean when a cardholder dies. That debt is still owed to the card issuers and must be paid by the estate or remaining signatory on the account.
Do I have to pay my mom's bills after she dies? ›You are not responsible for someone else's debt.
This is often called their estate. If there is no estate, or the estate can't pay, then the debt generally will not be paid.
It's important to remember that credit card debt does not automatically go away when someone dies. It must be paid by the estate or the co-signers on the account.
Will I inherit my parents' credit card debt? ›Certain types of debt, such as individual credit card debt, can't be inherited. However, shared debt will likely still need to be paid by a surviving debtholder. There are laws that protect family members from aggressive debt collectors who may use questionable methods to collect debts.
What debts are not forgiven upon death? ›Additional examples of unsecured debt include medical debt and most types of credit card debt. If you die with unsecured debt, repayment becomes the responsibility of your estate.
What happens if a credit card holder dies without paying? ›Instead, the responsibility for the debts is transferred to the estate of the deceased. Upon death, the deceased person's estate is established, and an administrator is appointed by the court to manage all of the financial affairs of the deceased, including their debts.
Is an executor responsible for debt? ›The executor — the person named in a will to carry out what it says after the person's death — is responsible for settling the deceased person's debts. If there's no will, the court may appoint an administrator, personal representative, or universal successor and give them the power to settle the affairs of the estate.
How do credit card companies know when someone dies? ›Credit reporting companies regularly receive notifications from the Social Security Administration about individuals who have passed away, but it's better to also notify them on your own to ensure no one applies for credit in the deceased's name in the meantime.
Do I inherit my mom's debt if she died? ›
It may come as a relief to find out that, in general, you are not personally liable for your parents' debt. If they pass away with debt, it is repaid out of their estate. However, this means that debt repayment could diminish or eliminate assets and property you could have inherited from your parents.
How to negotiate credit card debt after death? ›It's possible to negotiate the credit card debt of a deceased person if you're legally responsible for paying the debt. That means you must be the executor or the administrator of the estate, a cosigner or joint account holder on the credit card, or a surviving spouse in a community property state.
Who is responsible for paying deceased bills? ›The answer is basically that your debts become your estate's responsibility when you die. The executor you name in your will becomes responsible for settling your estate, which includes settling your debts.
Am I responsible for my deceased mother's credit card debt? ›You're not typically responsible for repaying the debt of someone who's died, unless: You're a co-signer on a loan with outstanding debt. You're a joint account holder on a credit card. Note: this is different from an authorized user.
Am I responsible for my parents' debt? ›Bottom Line. You are not responsible for your parent's debt. Any debt that they held is managed through the estate, and then disposed of.
How long can debt be collected after death? ›Overall in California, creditors have only one year to collect on a debt. In general, you cannot inherit someone else's debt.
What happens to credit card debt when an old person dies? ›How does credit card debt get paid after death? If the deceased passed away with credit card debt, their balances typically are paid from the proceeds of their estate. Depending on their assets and how much they owe, the debt may be repaid quickly from their cash.
Can debt collectors go after the family of deceased? ›If you are the executor or administrator of the deceased person's estate, debt collectors can contact you to discuss the deceased person's debts. Debt collectors are not allowed to say or hint that you are responsible for paying the debts with your own money.
Are credit cards payable on death? ›Do credit card debts die with you? A common misconception is that any credit card debts are automatically written off. Instead, any individual debts must be paid using the money the deceased has left behind. Only if there isn't enough money in the estate may the debt be written off.