Estate Planning

Do I Have to Pay My Deceased Parents’ Credit Card Bills?

Stack of credit cards

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 Leonick

James F. Leonick
Leonick Law, P.L.L.C.
TEL: (631) 486-9500


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