Questions about deceased estate

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Raymond01

Recycles dryer sheets
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Not sure if there is a better section of the forum for this thread. If so, please feel free to move it.

My mother passed away last month. All of her bank accounts were TOD to pass to 5 children. Likewise, her 3 life insurance policies had 5 children as beneficiaries. There are no other assets. Since these accounts and policies automatically pass to the beneficiaries at death, there is no probate. Does that also mean there is no "estate". She did have some money on a credit card balance outstanding. She was the sole account owner of the credit card. Does that credit card debt need to be paid, if so, how since all assets have already been disbursed. This is in the state of Missouri.

Thanks for any insight you can provide.
 
Sorry for your loss. I'm not in the legal field just SGOTI, but google says that in MO if there is no estate, and other factors like living spouse, joint account, etc, then the debt does not need to be paid.
"With very few exceptions, in Missouri the estate of a person is responsible for the debts, but not the individual family members or beneficiaries."
 
condolences on the loss of your Mom.
I wouldn't think anyone else was responsible for paying that bill, however, a consult with an attorney may be a good idea.
 
Condolences on your DM's passing.

Don't know the specifics about MO law. But TOD accounts are part of the estate and the estate is responsible for debts which should be paid off before distribution.

"Transferring control

Following the decedent’s death, taking control of the account can be a fairly simple process — all that might be required is to provide the death certificate and a picture identification to the account custodian. Because TOD accounts are still part of the decedent’s estate (although not the probate estate that the Last Will establishes), they may be subject to income, estate and/or inheritance tax. TOD accounts are also not out of reach for the decedent’s creditors or other relatives."

https://www.kiplinger.com/article/retirement/t021-c032-s014-transfer-on-death-accounts-and-your-estate-plan.html
 
Raymond01 said:
Not sure if there is a better section of the forum for this thread. If so, please feel free to move it.

My mother passed away last month. All of her bank accounts were TOD to pass to 5 children. Likewise, her 3 life insurance policies had 5 children as beneficiaries. There are no other assets. Since these accounts and policies automatically pass to the beneficiaries at death, there is no probate. Does that also mean there is no "estate". She did have some money on a credit card balance outstanding. She was the sole account owner of the credit card. Does that credit card debt need to be paid, if so, how since all assets have already been disbursed. This is in the state of Missouri.

Thanks for any insight you can provide.
Click to expand...

Raymond,

First, condolences on your loss.

I agree with what Sunset wrote and think that the credit card bill should have been paid from the bank account and then any amount in excess of her debts and final expenses distributed to her 5 children. IOW, TOD is a mechanism to avoid probate but isn't mechanism to stiff creditors for debt owed.

Now OTOH if someone's debts exceed their TOD bank account then the creditors are out of luck for the excess but would be entitled to receive the bank balance and the kids would get nothing. In those situations the credit card companies might try to guilt kids into paying the excess, but heirs have no obligation to pay debts in excess of assets so the credit card company would be out of luck if the debt exceeded the bank balance.

Could you get away with stiffing the credit card company since the bank account balances passed to her 5 children upon her death? Perhaps, I don't really know but it is likely that the credit card company would make that claim if the credit card debt isn't paid and the amount is significant enough.

Ditto with the cost of her funeral, except that funeral home may expect payment in advance unless you are known to them.

Besides that, I agree there is no estate to be probated.
 
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It may vary by state, but if you had to probate a will, the executor would have to see to it that the bills are paid. If no probate is required/needed, but she had money, what do you feel is the right thing to do?
 
The right thing to do is pay her lawful bills and split the rest.
 
Thanks everyone for your sympathies and input.

The bill cannot be paid from any of the bank accounts. Upon her passing, the bank accounts were "restricted". I was her POA for financial matters, but no one was a joint owner of her accounts. So any checks written after her passing were returned. I verified with the bank there was no way for me to withdraw money etc. The only thing the bank would do is disburse funds equally across TOD beneficiaries. Could I go to the beneficiaries and request funds to pay the bill? Maybe, but not as easy as you might think.
 
Yep, paying the credit card bill is the right thing to do.

Though I doubt a credit card company would try and claw back assets transferred POD.

Usually all the beneficiaries need is a death certificate to take possession of the above.

So once they have it why would they give any of it up?

Is there any need to even open an estate? Real estate, etc.?

If not and I weren't a beneficiary I'd circular-file any letters from the credit card company until they stopped.

Given I found marking them "return to sender - deceased" simply gets any letters re-delivered.
 
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Raymond01 said:
... Could I go to the beneficiaries and request funds to pay the bill? Maybe, but not as easy as you might think.
Click to expand...

But actually that is exactly what the estate representative/executor is supposed to do in most states. If no estate was probated, creditors can petition the courts to create one and then try to claw back enough of the TOD accounts to pay the debts. They could also sue whichever heirs they can find and recover the funds that way.

They probably won't bother if the debt is small though.
 
State law varies so widely on this that the only reasonable thing I could suggest is consult an attorney in the state where your mother lived. Any and all of what others suggest is true in some circumstances but not others, hence the need for a local attorney. For a short consult the fee won't be much.
 
How much credit card balance is there? That may help to determine if the card issuer will just write it off or try to recover; although I agree the card issuer should be paid what they are owed.
 
cathy63 said:
But actually that is exactly what the estate representative/executor is supposed to do in most states. If no estate was probated, creditors can petition the courts to create one and then try to claw back enough of the TOD accounts to pay the debts. They could also sue whichever heirs they can find and recover the funds that way.
Click to expand...

Interesting. How does this work practically? I understand that you can't hide from the IRS but I don't know how it would work for a private creditor. Are the beneficiaries of TOD accounts public information? And the creditor wouldn't know the account balance, right?
 
Sunset said:
OP - Any real estate or house, car, boat ?
Click to expand...

No real estate. No house, no car, no boat. Only things were a few bank accounts, 3 life insurance policies and a small annuity which has already been paid out to the beneficiaries.
 
I had a card company offer to settle a deceased’s outstanding bill for a lot less than the balance. I don’t think that’s unusual and it does provide a sense of settlement (versus walking away).
 
Raymond01 said:
A balance of $2300.00
Click to expand...
And how much were the bank accounts and life ibsurance? Were there any funeral or other final expenses? Or any other owing like SS paid after her death that she wasn't entitled to or other expenses?

What would your aunt want? Would she be ok with her heirs stiffing her creditors because she chose to TOD the accounts to make things easier for you or would she want for y'all to pay her debts and keep whatever is leftover?
 
A friend of ours was divorced 10 years when his former wife passed. She was a smart banker, VP at B of A and our accounts manager for years. She had a special credit card joint with him and she never removed him. While in her last days, she used that card for everything and allowed her children to run up a huge debt, then died.

The kids took the estate funds/ house etc and left him with all of the credit card debt he legal was obligated to pay, since he was sole owner of the joint card upon her death. She left him only this debt as a last kick in the jewels, nice gal. So, given these card companies can do that, I would just not pay it and let them beg from the heirs.
 
Wow, it must have been an acrimonious divorce. I wouldn't do that even to my ex-wife, but then that divorce was one of the more amicable ones I've ever heard of.
 
Walt34 said:
Wow, it must have been an acrimonious divorce. I wouldn't do that even to my ex-wife, but then that divorce was one of the more amicable ones I've ever heard of.
Click to expand...

He was so kind to her at the end, taking care of things as needed. It came as a huge shock to all of us friends to both. But from the way the children acted with their lawyer, you knew damn well they had planned this.
 
I would pay the credit card bill. I would ask the siblings to do the right thing and contribute to that payment. If they don’t, I would still pay the bill and I would tell the siblings that I did the right thing.

In PA, those bank accounts would still be subject to our inheritance tax. Someone would need to pay that. I see the credit card debt as the same. But MO is not PA.
 
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Happyras said:
A friend of ours was divorced 10 years when his former wife passed. She was a smart banker, VP at B of A and our accounts manager for years. She had a special credit card joint with him and she never removed him. While in her last days, she used that card for everything and allowed her children to run up a huge debt, then died.

The kids took the estate funds/ house etc and left him with all of the credit card debt he legal was obligated to pay, since he was sole owner of the joint card upon her death. She left him only this debt as a last kick in the jewels, nice gal. So, given these card companies can do that, I would just not pay it and let them beg from the heirs.
Click to expand...

Classy. Not!

I take it that he wasn't the kids father?
 
Yeah, some people are just feces.
 
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