Tag Archives: executor

Credit card debt after death – what you need to know

k15365456It’s often incredibly difficult to cope with the death of a loved one.  A creditor knocking on your door makes it even more difficult.

Can a creditor collect a credit card debt owed by your deceased parent or spouse?

There is not one simple answer to this important question.  There are many factors to be considered.  Here are 10 questions and answers to help you understand what may happen.

  1.  Are family, friends or heirs responsible for your debts?
    When you take out a credit card in your name, you’re agreeing to repay whatever you borrow.  That obligation usually doesn’t extend to anyone else.  The only exception is if you had a joint account holder.  That person would be responsible for all debt incurred through use of that credit card, even if the debt was not run up by  that joint account holder.
  2. Direct creditors to the executor.
    When you die, your obligations will transfer from you to your estate.  The executor of your estate will be responsible for handling all of your estate’s financial issues, including your debts.  If a family member gets a call about a debt and isn’t the executor, he or she should direct the caller to the executor and tell that person not to call again.
  1. Notify creditors and the credit bureaus.
    The executor should notify any known creditors as soon as possible about the death.  They should also notify the three main credit reporting agencies – Experian, Equifax and TransUnion – and request that the accounts should be flagged “Deceased: Do not issue credit”.  This will help prevent a very common problem – identity theft of the deceased.

The executor should also request a copy of the deceased’s credit report.  This will help him to identify any outstanding debts.

  1. Find out who’s responsible.
    As previously mentioned, people who request credit together are equally responsible for the total debt.  The same is true with a co-signer of a loan, who by cosigning is guaranteeing the debt of the borrower.

    Authorized signers on credit card accounts, however, aren’t liable.  They didn’t originally apply for the credit; they were just allowed to ”piggyback” on the account of the person who did.

  2. Stop using credit card accounts.
    If you’re an authorized user on a credit card account, you shouldn’t use the card after the main cardholder dies.  Because you’re not liable for the debt, this could be considered fraud.

    A surviving spouse can request a card in his or her own name.  However, it will most likely be a new card application, based on the survivor’s credit history, income, etc.

  3. Don’t split up all of the belongings yet.
    Nothing should be distributed until after the estate has settled its debts.  If there’s not enough money in the estate to pay those debts and belonging have been distributed, the heirs could become responsible for those debts.
  1. Ask creditors for help.
    If a surviving spouse is a joint account holder and is having trouble paying the bills, he or she may be able to work something out with the creditors.  He or she may be given time to get organized or to come up with the needed money.
  1. Community property states are different.
    If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and, if you choose it, Alaska) one spouse can be liable for the debts of the other, even if they didn’t agree to them or even know about them.  In these states, the surviving spouse will most likely be responsible for any credit card debts.
  2. If an estate can’t pay, the lenders lose.
    If the estate has more debts than assets to pay them, creditors may be forced to write off those debts.
  3. When in doubt, contact an attorney.
    Figuring out what to do about estate debts can be complicated so you might want to contact a probate attorney for help.

    For more information about identity theft of the deceased or how to settle an estate, check out our website, www.diesmart.com
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Do I Really Need a Will?

last-willYes, you do.  A will is a legal document which ensures that your property is transferred according to your wishes after your death.

If you don’t have a will, here are five things that can happen.  We found this list at nerdwallet.com.

  • Spendthrift heirs – If you have heirs who aren’t equipped to handle a large sum of money, receiving it may cause damage.  Perhaps these heirs are bad at handling money or, maybe, they’re drug or alcohol addicts.
  • Unexpected or contested heirs –  There may be confusion about who the beneficiaries really are.  Sonny Bono, musician and politician, died without a will.  His ex-wife, Cher, and a man who said he was Bono’s son tried to claim part of his estate, which his wife, Mary, contested in court.  Prince’s estate is another classic example.  Many people came out of the woodwork claiming to be relatives, entitled to a piece of his assets.
  • Property (and probate) in multiple states – If you own property in more than one state, your estate will have to go thru the probate process more than one.  Probate is a costly and timely process, even if you just go through it once.  Image if you own property in four states and your heirs have to hire four attorneys and go through the whole process four times.
  • Fabricated wills – If you don’t have a real will in place, it’s possible for someone to create a fake one – especially if your estate is large.  A famous case involved the estate of tycoon Howard Hughes.  When he died, several supposed wills surfaced, and his estate spent millions of dollars defending against the false documents.
  • Beneficiaries don’t like the court appointed executor – If there’s no will, the probate court will appoint one.  It may likely be an experienced attorney but not necessarily one the family knows.  It may take a great deal of time for this person to take inventory, appraise assets and distribute the estate.  If you have a will and name a family member as executor, that person will usually do a much faster job, possibly because that person is also a beneficiary.

If you don’t have a will, you should prepare one now.  Otherwise, your assets may not be distributed the way you want them to and a lot of extra money will go to attorneys and the probate court and not to your heirs.

For more information about wills, trusts and other estate planning documents, go to www.diesmart.com.

Your never to young to write a will.

yelchinAnton Yelchinleft, the Star Trek star, died a few months ago in a bizarre automobile accident.  He was 27 years old.  His assets were about $1.4 million….and he had no will.  He also had no spouse or children.  Therefore, his parents are asking the probate court to make them administrators of his estate.

He may not have wanted his parents involved in his estate.  He may have wanted someone else to handle his affairs.  But we’ll never know.  Accidents do happen and you need to be prepared.  Write a will today.  Make sure that people know what your wishes are so that they can be carried out after you’re gone.

For information about estate planning, check out our website, www.diesmart.com.

Where does your Pokemon go after you die?

PokemonEveryone today has several online account and is part of the digital world.  Are you one of the millions of people playing Pokemon?  Are you using real US dollars to make in-game purchases?  Do you place a real value on your game progress?

Well what happens to your account when you die?  According to a recent Forbes article, if you have online accounts for things like Pokemon, Facebook, LinkedIn, Twitter and Gmail,  the answer is not a simple one.

First  you need to look at federal and state law.  At the federal level, there isn’t any direct authority related to digital assets.  At the state level, some states have enacted legislation to allow an estate’s executor to gain access to some digital assets upon the death of their owner.  However, this legislation does not extend to all 50 states and is not totally consistent in its direction.

Once digital assets are treated more like physical assets, then your will, trust or state succession laws will determine how these accounts are transferred.  However, you may not want all of these assets transferred; you may want them deleted on your death.  For example, you may not want your spouse to read all of your emails or private Facebook messages.  You will need to indicate your wishes in your estate plan.

If you have online accounts at places like Home Depot or Lowes, you may want to direct your executor to pay any outstanding balance and then delete that account so that it can’t be hacked.

Have you read the service agreements that you clicked “okay” for when you signed onto Pokemon Go or Facebook or Gmail.  They put restrictions on your ability to share passwords or to transfer the account.  “In fact, Pokemon Go’s contract gives you a ‘limited nonexclusive, nontransferable, non-sublicensable license to the application.”  What this means is that when you die, your Pokemon Go account is dead as well.

As you can see, online accounts are governed by documents as well as state laws.  You need to carefully read the agreements that you “sign” so you can understand what you really have….or don’t.  When you prepare your estate plan, make sure that you include a list of the names of all of your online accounts, their passwords and usernames so your family can access your accounts when you die.  Develop a plan for the disposition of those accounts when you die.  It is an important part of any estate plan.

For more information about your digital estate, check out our book, Access Denied: Why Your Passwords Are Now As Important As Your Will.

Who gets your bible and your jelly jar collection?

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Do you have a tangible personal property memo as part of your estate plan?  I just read a Forbes article that really makes a good case for why one is necessary.

An example they used is as follow, “When a widow with incapacity issues and squabbling adult children died, the executor she named in her will rushed to her home and changed the locks just as one son showed up to take things left in her will to his siblings.”

“in another case, an elderly woman who lived in a run-down house despite having millions of dollars in securities in the bank, had told various nieces, nephews and friends from church that she would give them specific pieces of costume jewelry, the family bible and her collection of homemade jams.  What they were fighting over were these sentimental, valueless items because they had an emotional attachment to them.”

How can you prevent these kinds of squabbles at what is already a very emotional time in your family’s life?  Put everything in writing.  Don’t must make oral promises.  Spell out who gets what in a will, trust or personal property memorandum.  That way, there won’t be any guessing games or arguments.  Your executor will distribute specific items to those who you wanted to have them.

For more information about end of life planning, check out our website at www.diesmart.com.