Ask Terry Questions Credit Card balance at death

Credit Card balance at death

By Terry Savage on May 13, 2015 | Credit/Debt

My dad was just diagnosed with cancer and not given long to live. My question is he has large credit card debt. Me as the trustee to his trust am I responsible for his debt?

Terry Says:  I am sorry to hear that.  If your name is not on the credit card, you are not responsible.  So be sure to check on that.  Now, the credit card company can come after the “estate” however — the probate estate.  So, here’s an interesting wrinkle.  You say you are trustee to his “trust.”  This is the immediate time to make sure his trust is a revocable living trust, and that all assets are named in the trust — the house, savings accounts, personal property etc.  Then those will pass directly to the designated heirs, without going through probate — because they are owned by the trust!  (Retirement accounts or insurance proceeds pass directly to the named beneficiary.)

If all assets are properly titled in the name of a revocable living trust, then the “probate estate” is minimal. It might simply be the balance in the checking account, or a car or some personal property such as clothes.  Of course, if you charge up the card after the diagnosis but before his death, you would be committing fraud — so don’t think this is a free pass.  And be sure to notify the card issuers at his death.  If the balances aren’t huge, and there isn’t a large probate estate, the balance will likely be written off.  Consult your estate planning attorney now though, to verify this information in your state — and to get everything — healthcare power of attorney, living will (end-of-life directive) and the Revocable Living Trust in good order.

Oh, and here’s a great article on the subject at Bankrate.com:  http://www.bankrate.com/finance/debt/death-inherits-credit-card-debt.aspx

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