Expert: Kathleen Eads - 8/1/2006

Question
Thank you for getting back to me. Now I have a question in regard to the estate.  If the parent dies and all the parent has are checking/savings accounts, a brokerage account that is jointly owned by the parent and the adult child and the parent doesn't own any property because the property is in the adult child's name, if the credit card companies want to make a claim against the estate to collect their money is the brokerage account that's owned jointly part of the deceased estate?  If so, then can the credit card companies make a claim against the estate and collect the money from that joint brokerage account? Also, if the parent's property is in the adult child's name then that's not part of the deceased estate, right?  Thank you.  

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Followup To

Question -
I want to find out if a parent who has a lot of credit card debt dies, who is responsible to pay that debt off?  If the parent was a widow at the time of their death and they had one adult child, is that adult child resposible for the debt?  The parent owns a home but it might be in the child's name, they have a very very small insurance policy, so would the credit card companies go after the adult child to pay off that debt and the does that adult child have to pay it? If the adult child doesn't pay that debt will that adult child's credit be affected? Thank you.

Answer -
Kim,

Depending on the residency of this person and whether or not the person is married will dictate who is responsible for the bills left behind from someone who dies.  If they reside in a community property state, any spouse remaining is responsible for the debts of a spouse who passes away.  

If there is no spouse, the credit card companies are left with either filing a claim against the estate or writing the balances off (depending on how much is owed will determine what is pursued or what is written off).  

Unless the adult child is on the account, there should be no way the credit card company can pursue the the child.  The child is in no way, shape, or form associated to the debt and should not be held responsible.  

The only thing the adult child might be concerned with is if the credit card companies do file a claim against the estate.  This could encumber assets, keeping you from liquidating them.  If there are secured debts (cars etc), you could be forced to surrender such property, as the property was not paid for as contracted.  

As the adult child is NOT responsible for these debts, it should not have any bearing on the adult child's credit.  IF IT WERE ME, I would pursue the fullest extent of the law if I determined a creditor had reported any unpaid debts of my parents to my credit report.  

Hope you get it worked out,
Kathleen Crabtree-Eads  

Answer
Keep in mind, most credit card debt is unsecured.  This means secured creditors take 1st place in line, and if there's anything left over, unsecured creditors may file a claim with the estate and get a fraction of what is actually owed (if there's anything left in the estate).  

I'm not a probate specialist, and I'm not sure how a brokerage account would be handled.  You may want to consult with an estate or probate attorney to get these questions answered.  

If the property is in your name, I don't think they can touch it.  

Kathleen Crabtree-Eads