Expert: Regan Shinski - 9/5/2010

Question
I have terminal lung cancer, I have credit cards, in my name only, with outstanding balances. I have told my wife not to pay these debts upon my death. What assests are exempt from collections from these card companies. I have a joint checking/saving, IRA and my deed is jointsurvivorship. I have put our autos in my wife's name only. Are these accounts exempt from collections? If i take my name off of these accounts will they then be exempt? I live in Ohio.Can my wife be held liable for my credit card debt?

Answer
Hi Mark:

I am sorry about your condition.  My wife (42 years old) is battling stave IV breast cancer as we speak.  Don't give up hope!  She has been stage IV for the past three years.

Anything that does not have your name on it or that you are not co-signed to should be protected.  What happens is that an estate is created and an executor is named.  The ESTATE pays the debts, not survivors personally.  If the estate has not assets, the executor simply needs to send the creditors a letter saying there is no assets and 99% the time the debt goes away.  A creditor could challenge the debt in probate court.  In this case, the executor needs to show up and bring all relevant documents showing the assets of the estate and how he/she spent them.  The executor/estate can only get in "trouble" if they spent the money on personal things instead of paying debt or burial obligations or if they fraudulently manipulate of hide assets.

These rules do not apply to secured debt tied to a house, auto, or other asset.  In that case, the creditor can repossess the secured property if other arrangements for payment are not made and accepted.  In the case of a joint secured debt, your wife can continue to live and make payments on the property if it is in her name.

By the way, if you have a secured asset that is not paid for and upside down in debt, you may NOT want to switch it over.  Let the creditor repo it and it counts as a negative asset in the estate.  This way your wife is not saddled with an upside down debt.

Remember any life insurance is part of the estates assets that the executor will need to account for.  Retirement accounts, social security, and similar types of assets are generally exempt from probate obligations but, if they are large amounts, you may want to confirm if they are capped in your state.

If you have large liquid cash assets in the checking/savings, I would consider a separate account in your wife's name only.  If these amounts are fairly small and will not cover funeral expenses as an example, that is probably not needed as the account would be cleared after paying those expenses.

If you have LARGE assets, consider setting up a trust.  They are complicated to discuss in this forum, but are a way to shelter and pass on assets with limited tax implications.

Good luck and my thoughts and prayers are with you :)  Again, this is a sensitive subject for me but three years ago when my wife was diagnosed stage IV, we never thought we would see this day!  We turned our lives over to Christ that day and we firmly believe he has protected us ever since.  We hope you find the same peace and comfort.

I hope this information helps.  It sounds like you have taken many necessary steps to protect your family.

Regan
mbscompany@aim.com