When people think about estate planning, often they are most concerned with assets. But many wonder what happens to liabilities, or debt, when a person passes away. Individuals with credit card debt, or those responsible for executing the wills of individuals with debt, may have questions about what to do with this type of liability in the estate execution process. Here is what Michigan executors should do regarding credit card debt after an individual dies:
- Step 1: Inform the credit card companies: Executors will be responsible for closing all accounts of the deceased, including credit cards. It is important to inform a credit card company when an individual dies. This will help prevent fraud and start the process of closing out the account including settling any outstanding debts or legal issues.
- Step 2: Stop using the card: Some credit cards are jointly held, so a secondary cardholder may still be using the card. In order to simplify the settling of debts and interest from the primary cardholder, it is advisable to not use the joint credit card after death. In fact, depending on the type of credit card ownership, using a joint card after the primary cardholder has passed away could be considered fraud.
- Step 3: Pay outstanding debt if possible: At this point, it is a good idea to speak to a lawyer about legalities such as time constraints or protocols regarding paying off credit cards. Some complexities can emerge in situations where, for example, and the estate has insufficient funds to pay off debt. There are laws around this that protects both the creditor and the beneficiaries, depending on the circumstances.
In many cases, dealing with credit cards after death is fairly straightforward, such as when individuals who have easily accessible funds to cover the amount outstanding on the credit card bill. However, for those whose liabilities outweigh their assets there may be more complexities. Other complexities can include recurring bills that are not properly stopped by the executor, or identity theft that takes place after death. To help prevent such challenges and move more smoothly through the process, it is advisable for an executor to work with an experienced Michigan estate planning attorney.