Credit card holder death

[MustObey]

A family member has passed away, she had 2 credit cards in her name that her spouse was not aware of. Will her spouse now be liable for those debts.

Background info:

• They were married
• The Will left everything to spouse
• They had a joint mortgage on their home, will states all property to pass to spouse

The debts can be taken from her estate
so if she had savings then they have to be used to pay the bills
depends how much the cards were whether the lender will try to put a charge on the house

The lawyer handling the will should take funds from the estate to pay the credit card (and any other outstanding debts), before the remaining funds are passed to the spouse.

The only funds are what is in there joint current account....no savings accounts etc and the 1 property was in joint names.

so the 50% on the current account goes against the debts
and the balance comes out of the 50% of the house
best option is a £10 / month repayment agreement

Thanks, just trying to get an understanding of it, as he knew nothing about them until statements came in the post on Friday.....he is going to call them on Monday and advise of her death (02/04) and take it from there....just knocked him for six I think as he had no idea about themz

He can't inherit anything from her until her debts have been repaid.

so the 50% on the current account goes against the debts
No it doesn't. In a joint account, in the event of the death of one of the account holders, any money in that account is the property if the surviving account holder

Update: Bank have taken deceassed name of current account and said all money transfers to sole account holder.
Both credit card companies contacted and have logged her death and are passing it to the relevant teams to decide whether they will be asking for monies to be repaid or will writeoff......apparently they sometimes do, so he is just waiting to find out (as put money aside to pay them if required)

The same applies to the house if in joint names rather than tenants in common - it now becomes the property solely of the spouse.

Can you insure against this does anyone know? I really worry this might happen to me. Wouldn’t want to lumber anyone else.

Sorry to hijack

What amounts are owed on the credit cards. usually debts die with the person

There was a case some years back where spouse had debt but cc wouldn’t speak to other spouse about debt as not in her name... until spouse died

Then they came after her for entire debt, she fought them as they wanted her to pay if debt that went over his half

i thought a credit card account would die with the borrower

This hasn't been explained very clearly yet.

First, let's talk about what happens to someone's assets when they die. You can basically have assets of three types:

• Solely yours. These assets become part of your estate when you die.
• Assets held "in common" with someone else - typically just property. You'll typically have a percentage of the overall asset, and that portion of the asset becomes part of your estate when you die.
• Assets held "jointly" with someone else, like a joint bank account, or a joint tenancy on a house. These assets become entirely owned by the other joint owner when you die - they don't involve your estate at all.

If there's debt in your name, the creditors cannot go after anyone else, but your estate still owes them - and they must be paid before any beneficiaries of your will.

So let's imagine that you die with

• a credit card debt of £10,000
• a bank account in your name with £5,000
• a joint bank account with your partner with £10,000
• a house owned 50/50 with your partner as tenants in common.

What happens is:

• The joint bank account immediately becomes solely your partner's - the credit card company have no claim on that money.
• Your bank account and your half of the house go into your estate.
• Ignoring funeral and administrative costs to keep things simple, the £5,000 in your bank has to go to the credit card company.
• Your estate still owes the credit card company £5,000. Let's imagine you left your half of the house to your partner. Typically, one of two things would happen here. Either the partner could pay off the credit card company and take full, unencumbered ownership of the house. Or the credit card company could put a charge on the house so that they get paid their money out of the proceeds the next time the house is sold.

If all your assets were joint, though, the credit card company would have to write off the debt, as there would be no assets left to repay them.

Wow! how does the joint ownership thing work with IHT? If I win the lottery then put all my assets in joint accounts, held jointly with each of my intended heirs, surely they would still be liable for IHT?

I think you could do that but would have to live 7 years to avoid any inheritance tax liability. However, if you needed care and had deprived yourself of capital, then you may not be entitled to have your care costs paid for and your relatives would be liable.

Inheritance tax is a different matter. The government are always keen to protect their own interests :-) See www.boodlehatfield.com/the-firm/articles/joint-accounts-whose-money-is-it/ - particularly the "Tax issues" section. In short, the government will look at who put what money into the account. So if all the money paid into a joint account came from you, HMRC will consider it to have been entirely yours for inheritance tax purposes.

Does interest continue to accrue on a credit card after death?

Thank you thePants- very interesting!

@RandomlyChosenName I think it can, but I believe most banks will typically freeze it when they're sent the death certificate.