Tag Archives: estate

Credit card debt after death – what you need to know

It’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.

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.
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.

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.

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.
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.
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.

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.

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.
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.
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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When is online estate planning a good idea?

First of all, what is estate planning? It’s the process people follow to protect their estate and their family in case of their incapacitation or death. It includes such things as writing a will, naming a guardian for an surviving minors in the family, creating trust accounts, naming an executor for the estate and setting up a durable power of attorney.

Traditional estate planning can be quite expensive and many people can’t afford it so they are turning to an online option – the virtual legal service. For example, a traditionally written will can cost between $500 and $1,000 to prepare. An online version can be done for an average of $60, a much more affordable choice.

Here are three questions to ask yourself before you decide whether the online option is a good choice for you.

Do I have a simple situation?
If you don’t have any minor children and your estate is relatively small, you probably could use an online service such as Rocket Lawyer.
How big is my estate?
If you have assets and insurance in excess of the current estate tax exemption ($5.45 million per individual in 2016) the online option probably is not for you. You would do better to work with an estate planning professional who will help you evaluate the ways you can leave money to your beneficiaries while minimizing estate taxes. This could include setting up a trust that would minimize taxes and avoid probate.
Do I need expert legal advice?
Even with a small estate, you may have special circumstances that require expert legal advice. For example, if you are part of a blended family, own property outside of your state or have a disabled family member, online planning may not be for you. You may need to speak with an attorney to discuss your specific needs and to work with that expert to create a plan that meets your needs.Although online estate planning is a good choice for many, make sure you consider your current situation, the size of your estate and your other circumstances. Then decide whether hiring an estate planning attorney is the best option for you or whether you can comfortably go the online route.

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

Facebook declared people prematurely dead. Were you one of them?

On Thursday, 11/11, Facebook had a bug. It was one that managed to modify user profiles and declare those users dead. Even Mark Zuckerberg, Facebook’s founder, appeared dead on the site.

Despite being very much alive, users found their accounts switched to a “memorialized account,” reserved for the deceased, with the word “remembering” posted beside their name.

A statement reading: “We hope people who love Mark will find comfort in the things others share to remember and celebrate his life,” appeared on Mark Zuckerberg’s profile before being corrected.

Facebook provides a form to request the memorialization of accounts of the deceased. It requires documentation of a death, presumably to prevent people from triggering errant notices. If this option is selected, their profile will continue to exist, but only as a memorial. A logon is no longer available but people can post memorial messages to the deceased.

Many people woke up Thursday to find that their accounts had been memorialized and Facebook thought they were dead. I imagine that could be very scary for someone who’s still alive. The bug has now been fixed

To learn more about memorialization and what to do about other online accounts when someone dies, go to www.diesmart.com.

Will you get a call from a debt collector?

Did you know that if someone dies with unpaid bills like a balance on a credit card account, a family member or close friend will get a call or letter from a debt collector.

A few years ago, the FTC (Federal Trade Commission) issued new guidelines related to this subject. The guidelines “widen the universe of people who could receive collection calls or letters”. This makes it very important that anyone receiving such a call or letter knows his legal rights and obligations.

Debt collectors read the obituaries and then check to see whether the person who just died has any surviving relatives. If so, they immediately begin sending out letters or making phone calls and harassing them for whatever is owed.

Rules vary from state to state but, in general, here are a few things that usually apply.

Family members or friends are not obligated to pay out of their own pockets for debts incurred by a deceased person.
If a family member or friend has co-signed a credit card or loan application with the now deceased person, that relative or friend is probably obligated to repay the debt.
If the deceased left a will and the estate is in probate, debt collectors can attempt to collect their money from the assets of that estate.
Assets that are specifically bequeathed to someone or that were jointly owned by the deceased and another person generally go to that person outside of the estate and are usually not reachable by debt collectors. In the 10 community property states, assets are generally considered joint property and can’t be touched by a debt collector.

What does this mean for you? If someone close to you dies and you are contacted by a debt collector, don’t give that person any information or commit to anything. See assistance from a local credit counselor or attorney to get guidance on how to proceed. Otherwise, you may find yourself paying money to a debt collector unnecessarily.

For more information about settling an estate, go to www.diesmart.com.

Want to avoid probate?

You may think that if you have a will and in it you name the person who should inherit your home, that’s all you have to do. Yes, it is if you’re willing to have the home go through a probate process. That probate process will cost the beneficiary a lot of money as well as time and will be a public record.

However, there’s now a way that many can avoid the whole probate process and that’s thru the use of a transfer on death (beneficiary) deed.

There are several states that have a similar law and California just joined their ranks in January of this year.

If you live in one of these states, you now have the option to complete a Revocable Transfer On Death Beneficiary deed and name a beneficiary for your home. After your death, the beneficiary can directly claim ownership rights to the property without involving the probate court and paying probate fees.

The deed can be completed and filed without hiring a lawyer or paying a third party to record the deed with the county recorder.

For some homeowners, a TOD Deed can be a cost effective way to avoid probate on the death of the last owner. If you own a home and have it listed in your will, you might want to consider this new option.

For more information about probate and estate planning, go to www.diesmart.com.