Have you been following any of the latest news stories about the crushing credit card debt owed by the typical American family? Yikes! It is no longer unusual for someone to have more credit card debt than assets.
A recent article in the Deseret News titled “What Happens to Credit Card Debt When Someone Dies?” discusses various scenarios.
Basically, credit card debt must be paid out of any remaining estate assets before any heirs can inherit. The good news: in most cases no one will "inherit" the debt.
If there are not enough assets in the estate to pay the debt, then the estate (and debt) ceases to exist for all practical purposes.
However, there are some exceptions.
In community property states (neither Kansas nor Missouri is a community property state), a surviving spouse will be responsible for any unpaid credit card debt. Also, in any state, a joint owner of the credit card account would be responsible for paying off any remaining debt in the account.
It is important to understand how your debts will be paid off after you pass away. If you have credit card debt, or any other type of debt, be sure to seek the counsel of your estate planning attorney. He or she can help you develop plans to pay off your debts so you can still leave an inheritance for your loved ones, if desired.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Deseret News (June 24, 2014) “What Happens to Credit Card Debt When Someone Dies?”