Houston Estate Planning Law Blog

ESTATE ADMINISTRATION AND CREDIT CARD DEBT

If one passes, what happens to unpaid credit card debt? As with most debts, credit card companies will usually attempt to get compensation from the cardholder’s estate. Texas residents may benefit from knowing how this process works in estate administration. In most cases, the debt of the cardholder will be paid from their estate. If there is not enough money in the estate to pay the debt, credit card companies may seek to obtain the money from the relatives of the deceased person. On the other hand, this is not the norm.

Typically, if credit card companies are unable to collect on the debt from the cardholder’s estate, they often drop the debt. The reason for this is because relatives are not legally obligated to repay the debt of a deceased person. The exception to this rule is when an account was opened up as a joint account.

What is a joint account? This is when named individuals of the account are responsible for the debt, and the credit card company will be able to collect from either one of the parties. So, if one party dies, the other will become financially responsible for outstanding debt. When the person using the other card is simply an authorized user on the account, they are not responsible for the debt and when the account holder dies, the account must be closed. If the authorized user wishes to use credit, they will have to apply for an account on their own.

If someone passes leaving behind credit card debt, the estate executor must consider this and the potential outcomes. Estate administration will be necessary to review the details of each account before proceeding. While it may be uncomfortable to talk about debt, it is an important consideration for estate planning at all ages, and should be taken seriously.

Source: Boston.com, “What happens to credit card debt when you die?” Cheryl Costa, June 29, 2012

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NAVIGATING PRIVACY CONCERNS IN ESTATE PLANNING IN TEXAS

It goes without saying that, when it comes to matters financial in nature, many people in Texas are concerned about privacy, regardless of their current financial situation. Members of the older generations, especially those who are just starting the estate planning process, are no exception. For people who find themselves concerned about financial matters after death becoming open to the public, there are ways to alleviate those concerns and maintain privacy.

In the state of Texas, the executor to an estate is required to complete a certain set of tasks to ensure the estate is allocated properly. This process must be conducted within 90 days of becoming executor and includes a public filing of bank accounts and investments for estate. In most cases, the information filed, including in-depth personal information, becomes a matter of public record. Needless to say, those who take issue with personal and financial matters becoming public find this disturbing.

Filing the information with the court is part of a series of events known as “inventory, appraisement and list” of claims and is a provision of Texas law. The goal of the procedure is to allow creditors to ensure the estate has enough assets to cover debts. The inventory is then filed with public records, which means essentially anyone can gain access to the information. In some cases, these inventories even make it onto an easily accessed website, depending upon specific recordkeeping policies.

Nonetheless, there are ways to avoid privacy panic. New Texas laws mandate that, if there are no unsecured debts held by the estate, filing an inventory with the court is not required and the information must only be provisioned to beneficiaries of the estate. However, revocable living trusts are often considered an even better option. In the case of a revocable living trust, an attorney can set up a trust for the estate wherein the trustee can distribute the assets in a completely private and undisclosed manner, avoiding probate court altogether. An attorney who has experience in estate planning may be able to help answer questions pertaining to privacy and the benefits of a revocable living trust.

Source: San Antonio Express-News, “Can estate inventory be kept private after mom dies?” Paul Premack, Sept. 27, 2011

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