Questions about deceased estate

[ncbill]

A balance of $2300.00

Creditor isn't going to force probate for such a small amount.

They'll sell that debt to a collection firm that will send her what seems like an infinity of dunning letters.

If her beneficiaries aren't willing to pay or settle that bill, consider changing her credit card address to the cemetery's address.

 

[Backpacker]

Sure makes a case for age discrimination. Every year older equals a reduction in credit limit. I saw this play out many times in my lending career. Very few heirs stepped up and made good on the debt. In MI if married all assets transfer automatically to surviving spouse with no probate. So if sole owner on your CC and you pass away spouse can receive unlimited money and no way to force them to pay.

 

[youbet]

former wife

The most frightening words that exist! (At least for hapless ex-hubbies!)

 

[SJhawkins]

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.

This is what I would do as well. I have been the exec for one estate, one time was enough. Be glad you are not dealing with a trust too!

 

[Bamaman]

Chances are that there will be no probating of the will required.

The estate is legally liable for any debts she owes including credit cards, utilities (if applicable), cell phone and especially federal and state income taxes for her last year. Most cases there will be some bills to pay for hospital and doctors' bills too.

After every creditor is paid, then the funds should be transferred to the children.

 

[HarveyS]

Perhaps you could send a letter explaining the situation. Include a check for 20% of the amount due, along with the names, addresses and phone numbers of the other 4.

 

[frayne]

The right thing to do is pay her lawful bills and split the rest.

Ditto

 

[Lewis Clark]

... 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. ... Does that credit card debt need to be paid, if so, how since all assets have already been disbursed.

In my research on setting up an estate plan, I found several authors who recommended having one account without TOD/POD designations. The purpose is to help ensure there is some cash available to pay the estate's final expenses before all of the cash gets distributed to heirs.

 

[athena53]

Creditor isn't going to force probate for such a small amount.

I agree- my Ex died with nothing and had no will. An attorney advised me that if a creditor contacted us we should tell them there would be no probate proceedings but they could open them if they wanted to. No one contacted us. (DS was next of kin.)

Sure makes a case for age discrimination. Every year older equals a reduction in credit limit.

I just got a new Amex card. I declared my income as $120K, which was my AGI on my 2021 taxes. They gave me a card with a $40,000 limit and I'm 60 years old and have two other cards.

In the OP's case I'd pay off the credit card bill from funds in the estate because it's the right thing to do and it's not that much.

 

[ERD50]

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.

Wait a minute. The way I'm reading this, it is the ex-wife that "did that", not the credit card company. The CC company is just following the rules, if he was joint on the card, he's responsible.

I guess this is a case to validate that one should pull their credit report from time to time. He would have known that he was joint on that card, and would have straightened that out. Hindsight is 20/20, more of a lesson to the rest of us.

-ERD50

 

[cathy63]

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?

I don't know how a creditor would know that non-probated bank accounts were part of an estate. I suppose if the debt were large enough they'd open probate, get themselves named as executor and then attempt to locate the likely heirs and ask them. Now that OP has said the debt in this case is only $2300 that's clearly not enough to make it worth pursuing. The CC issuer will write off the debt.

Real estate is different. In my state TOD beneficiaries are personally liable for unsecured debts of the decedent up to the fair market value of the deeded property they received. Property is pretty easy to find since deeds are recorded.

 

[Car-Guy]

The CC issuer will write off the debt.

Anyone ever wonder what happens to all the debt the CC companies must write off/forgive/abandon. (Rhetorical)

 

[pb4uski]

Wait a minute. The way I'm reading this, it is the ex-wife that "did that", not the credit card company. The CC company is just following the rules, if he was joint on the card, he's responsible.



I guess this is a case to validate that one should pull their credit report from time to time. He would have known that he was joint on that card, and would have straightened that out. Hindsight is 20/20, more of a lesson to the rest of us.



-ERD50

I was having similar thoughts. Exwife was a duplicitous b!tch and her kids were deplorable. (I would wonder if the kids were authorized users of the cards).

But the ex-husband that got stuck with the bill has some responsibility for not checking his credit report as we are all advised to do regularly.

 

[pb4uski]

Anyone ever wonder what happens to all the debt the CC companies must write off/forgive/abandon. (Rhetorical)

I know. [emoji16] The people who don't pay their balance in full every month end up paying for it. It does make me wonder how much of that ~18% that they pay is for stuff like this.

 

[Car-Guy]

I know. [emoji16] The people who don't pay their balance in full every month end up paying for it. It does make me wonder how much of that ~18% that they pay is for stuff like this.

Yep, it "almost" seems to justify the high interest rates they charge... Almost... One thing for sure, the CC companies are not going to lose that money.

But I guess folks like me contribute to the problem in a different way. I always pay off my CC each month in full and I get 1 to 3% cash back. Someone has to pickup that tab too!

 

[RetMD21]

I don't know how a creditor would know that non-probated bank accounts were part of an estate. I suppose if the debt were large enough they'd open probate, get themselves named as executor and then attempt to locate the likely heirs and ask them. Now that OP has said the debt in this case is only $2300 that's clearly not enough to make it worth pursuing. The CC issuer will write off the debt.

I was wondering if they could get information from the bank about the account that was used to pay the cc bills before opening probate. Things like account balance and beneficiaries. The account balance size might give them an idea if it was worth opening probate. IDK if a collection agency would buy this sort of debt.

 

[CRLLS]

Yep, it "almost" seems to justify the high interest rates they charge... Almost... One thing for sure, the CC companies are not going to lose that money.

But I guess folks like me contribute to the problem in a different way. I always pay off my CC each month in full and I get 1 to 3% cash back. Someone has to pickup that tab too!

In a lot of cases, a portion is the retailer. They pay a noticeable percentage of every sale to the CC company. Folks like us, who pay it off every month, put our part of the burden directly on the retailer. Let's see, assuming a charge of 2000 per month paid off and assuming 1.25% fee works out to be 2000*0.0125*12months = $300 per year. I used 1.25% as a PFA number. Yeah, we get some of that back in points or $$ or..... I don't know what percentage each retailer pays. I know it varies considerably. According to Forbes, The average credit card processing fee to the retailer ranges between 1.5% and 3.5%.

BTW, on a different note, if my math teacher asked me to calculate the average of a group of numbers he presented, I would fail if I answered "A range from x to y".

 

[Sunset]

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.

......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. ......

...... The CC company is just following the rules, if he was joint on the card, he's responsible.

I guess this is a case to validate that one should pull their credit report from time to time. He would have known that he was joint on that card, and would have straightened that out. Hindsight is 20/20, more of a lesson to the rest of us.

-ERD50

This was attempted against me, during my divorce.
My ($%@#$%^) ex racked up the credit card to ~$50K over a few years.
Yes the divorce was over 5.5 years long (a nightmare)
My ex carried that balance right to the finalization.

For some odd weird reason, my ex thought I had to pay 1/2 of the credit card bill, but I've never had a joint credit card so I paid $0

 

[Happyras]

This was attempted against me, during my divorce.
My ($%@#$%^) ex racked up the credit card to ~$50K over a few years.
Yes the divorce was over 5.5 years long (a nightmare)
My ex carried that balance right to the finalization.

For some odd weird reason, my ex thought I had to pay 1/2 of the credit card bill, but I've never had a joint credit card so I paid $0

Awesome, at least some get justice! The difference with my friend was he married the woman who had 2 kids, he raised them and paid for many things by refinancing his paid off home (she was a banker). That money all went away over their marriage, he even lost a major part of his retirement savings in the divorce as well as getting stuck with the mortgage.

He is essentially broke and over 70 years old, to him a 20K cc balance is nearly all his savings. But then, this was his 4th such divorce.......

 

[MarieIG]

This was attempted against me, during my divorce.
My ($%@#$%^) ex racked up the credit card to ~$50K over a few years.
Yes the divorce was over 5.5 years long (a nightmare)
My ex carried that balance right to the finalization.

For some odd weird reason, my ex thought I had to pay 1/2 of the credit card bill, but I've never had a joint credit card so I paid $0

It varies from state to state and depends upon the situation. Had the ex racked up expenses paying for the necessities of minor children - i.e. medical it is likely not being on the card would have not have provided "protection." Someone racking up unnecessary charges while the couple lives apart would be unlikely to evoke any sympathy from the judge (vis-a-vis disputed charges).

 

[ncbill]

Chances are that there will be no probating of the will required.

The estate is legally liable for any debts she owes including credit cards, utilities (if applicable), cell phone and especially federal and state income taxes for her last year. Most cases there will be some bills to pay for hospital and doctors' bills too.

After every creditor is paid, then the funds should be transferred to the children.

Well, the OP seemed clear that all financial accounts are POD/TOD (no probate estate) so I doubt any of the above would be paid.

 

[MarieIG]

Well, the OP seemed clear that all financial accounts are POD/TOD (no probate estate) so I doubt any of the above would be paid.

It is probably not a large estate so as a practical matter, will not come into play - but there can be a difference between the taxable estate and the estate which passes via probate.

 

[Teacher Terry]

I see how the pod on the accounts helped the heirs but they should do the right thing and pay the CC debt.

 

[MarieIG]

I was up to date on all of DF's bills before he passed (any credit card was paid in full each month and balances were low). The funeral home took a personal check; and I paid off anything that came in immediately (I am not a fan of debt) from a joint account. To be fair, it was just me, myself and I at that point so I didn't have to claw back anything. I was very slow transferring my parents' house to my name (I paid all bills and taxes but was depressed and transferring assets into my name didn't help), but believe it or not, neither the Town nor anyone else had an issue taking my checks.

 

[ncbill]

It is probably not a large estate so as a practical matter, will not come into play - but there can be a difference between the taxable estate and the estate which passes via probate.

With no probate opened, who's going to file estate tax returns?

Assuming there really are POD designations on all assets, the OP will only have to file mom's personal tax return.