Yep. That’s right. If you are notified that your Grandmother just passed away and that she left a substantial sum in her bank accounts, don’t cash that check right now. Don’t run off and purchase that new 60” Plasma just yet.  It may be that those bank accounts belong to the bank.

Some roller coaster huh?  Grandmas gone (sad face), but she left a lot of money in her bank accounts and life insurances (Yay!) But the money belongs to Chase Bank (RATS!)

If her estate owes more than it’s worth, in most cases the credit card companies will be forced to eat the balance. (Boo Hoo). But in some instances you may be liable for any balance on Grandmas credit cards after the estate has been liquidated. What instances? Well, I’m glad you asked…

Cosigned credit cards.  It goes without saying. I have written past blogs about the dangers of consigning for debts, but hey…it’s Grandma! While Grandma might not be as flaky as cousin Ralph, you may still find that you are left holding the bag after Grandmas demise. Many times the credit card is so old that you forgot that it even existed. But like sharks, credit card companies will swarm when they smell blood. If Grandma asks if you could cosign on her credit card (perhaps to help her with purchases), a better way to go may be to get a card where you are listed as an authorized user only. That way you are not liable for the debt in case the unthinkable happens.

Using the card after her death. Okay. Grandma just passed and you are on one of her credit cards as an authorized user. The funeral expenses are fairly high, so you use the card to pay for it. Makes sense. Or does it? The credit card company will eventually put two and two together and realize that Grandma could not have approved the credit card purchase (unless you have a toy telephone from the Twilight Zone)

The credit card company will immediately pursue the user for the purchase. This can be construed as Fraud. Yikes…big, scary word, but Fraud it is. This “fraud” allegation could even be used for purchases while Grandma was still alive. If Grandma is on deaths door and you use the card, knowing that Grandma would not be alive long enough the pay the debt, the creditor may scream “fraud” and pursue you for the balance. Fraud is a Criminal matter and can be pursued as such. It is tantamount to finding a credit card on the street and running to the store and using it. So rethink using that card.

 Divorce.  Your spouse was ordered to pay the credit card debts in the final divorce order. You think that’s the end of it, then soon after your ex-spouse dies in a fiery car crash. (Too morbid?) Okay, your ex-spouse passes away quietly while they slept. Anyway….you think the credit cards went with them. Credit cards company do not care who was ordered to pay them in the divorce, they consider that both of you are liable, and now that the other card holder has slipped quietly away into their eternal rest they are now coming after you!  RATS!

Community Property? Your spouse has just passed and now the credit cards companies are asking you to pay his credit card debts. You were not a cosigner on the account, and in fact you were not aware the debt even existed! How can you be liable? Many states, California included, are considered “Community Property” States. Most people think of Community Property as actual property such as houses, cars and the like. However, most people do not know that debt is also property, and in community property states, the surviving spouse may be liable for these debts. Community Property laws vary from state to state and can be very convoluted and confusing. If you find yourself in this situation, contact an attorney. Don’t just blindly send a payment to a credit card company just because a collector calls you and threatens you. You have rights! Talk to an attorney that specializes in community property law or estate law.

You are the beneficiary of the estateAs a beneficiary or trustee of an estate, you will be the last to receive any benefits from the estate. The debts come first, and not until they are taken care of, will you see any money. So as I stated before, don’t run off and spend the money until you know what it left. As they say, “Don’t count your chickens until their hatched”. Good advice.  There are specific time frames for creditors to file claims against the estate.

Know your rights! Always-good advice. And just because a creditor is calling does not mean he necessarily has the right to try to collect from you. Don’t fall for collector’s shenanigans. Before you do anything, consult an attorney! 

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