Dealing with death is difficult enough; still, being organized is imperative when handling a loved one’s finances after they have passed away. Many people believe that debt is inherited by the family when someone dies but that is not necessarily the case.
We’ve discussed how important it is for seniors to be protected from financial abuse, and how crucial it is for a person to have their finances in order. Once that is taken care, be sure you’re up to speed on what happens to any credit card debt when an untimely event occurs. Following are two credit-related things to keep in mind during that difficult time.
Joint Credit Cards
If you’re only an authorized user on a card you’re in the clear, but if you co-signed for a credit card you might have to pay off the credit card debt. Joint card holders may be a parent and child or a married couple. In some cases you may have co-signed for a card and either forgotten that you did so, or someone signed for you. Be sure check your credit report yearly for any possible new accounts and review accounts that are open.
Divorcees need to keep in mind additional credit card debt responsibilities if they reside in a community property state such as Arizona, Texas, or Washington. In these states any property acquired during the marriage is owned jointly and will be divided upon a divorce, annulment, or death. Depending on your state community debt laws vary so you will need to speak with a lawyer to find out what laws might apply in your case.
Beneficiaries & Authorized Users
If you are an authorized user on a credit card, do not continue to use the card after the account holder has passed away. A case could be made against you for fraud.
Additionally, beneficiaries should expect less as debts will be paid first before a beneficiary receives any money from an estate.
For credit cards, be sure you are up to date on your state’s laws about credit card debt and death, have all the information you need, and contact the credit card companies to let them know the account holder has passed away. You’ll also want to watch for any suspicious activity as you do not want the deceased’s identity stolen. Setting up a credit monitoring service early on might be an option as well to help you watch for fraud, stolen identities, and other suspicious activity. AmOne can help you find credit monitoring services for free; contact us to learn more.