I'm a co-owner / joint account holder on my 98 yo mother's checking account, and her POA. I pay her bills from this account. She also has 2 credit cards under only her name at the same bank. I pay the minimum due each month from the joint checking account. When she dies, will I have any liability for those credit card balances? Everything I read seems to indicate no. But, I want to make sure, as there will be nothing left to pay them with when she dies (all her income goes to AL facility). I don't want to be liable for her credit cards if I am a joint checking/ co-owner account holder. When I called bank today to verify I was a co-owner not just co-signer, they said there were no other accounts under my name, so definitely the credit cards are only under her name.
Now if it secured debt, it’s my understanding that those run outside of NOC rules. Like if there’s a mortgage or car note, the contracts for those have the real property as collateral so outside of a debt to the estate. NOC is for unsecured debts. If yours is a Level of Claim by Class state for probate, Credit card debt could be way down on the list. Like for TX, it’s a class 8 claim, so everything in Class 1-7 have to be dealt with first before CC debt. So good luck on getting any of the distribution from whenever that part happens for an estate. Plus if the executor/ atty want to go all hard ball, they will do in chambers meetings with debtors and in order to continue to have your “place”, the CC will have to have their atty get their butts over to the meeting. They won’t bother.
My Mom has a Trust Account. If you do not have one I'd suggest you investigate that option. It stops Probate Court from coming in after she passes.
My Mom too has a separate personal bank account with credit cards. Once I got POA I closed her personal checking account. We only have the Trust now. Mom was the Executor I got her to sign off so I was the Executor. That took her name off all banking accounts. She can not even go to the bank and ask questions now much less get on the phone and use the credit card to charge stuff. I would not suggest you leave her with an option to call and buy things. I was worried my Mom would give all her money to some TV Evangelist or donate to the Hope Ship as her Dementia has destroyed her short term memory. I could not take that chance & don't suggest anyone leave that door open with a family member who has memory loss due to Dementia.
A Trust account stops Probate from coming in upon death. What a probate court is looking for are availability to get Death Taxes from the assets. The probate court doesn't like investments. They like cash. So they will sell investment assets to get everything into a cash situation were by they can take their cut and the family airs can divide up what is left. A Trust Account stops that. Just FYI.
Another consideration would be, will there be money left in the estate when she passes. The credit card company would have to file a claim against the estate to try to claim any outstanding balance.
answers to your questions below !
I would see an elder law attorney for your question. Normally when someone dies the credit card company can come after there assets. What will happen is anyone's guess. Normally also, a joint account becomes the account of the remaining live person upon the death of the other account owner. But you are currently paying bills for Mom out of this account. This may lead to questions. Again, I would take your question to an attorney. Your POA pays for this service. Be certain elder law attorney paid by the hour simply to answer some simple questions.
My two children just went through probate for their deceased dad's estate which was mostly debt.
It was in South Carolina. He had around $40,000 in credit card debt which the probate attorney advised them not to pay. The banks did not file a claim against the estate and they ended up not having to pay it back out of the estate.
Their dad did however have tax debt to both the IRS for about $30,000 and to South Carolina for about $28,000 and they did have to pay those from the estate. The tax debts don't get written off. Hopefully your mom doesn't owe debt to the government.
Hope that helps.
Yes, I agree with freflyer can you pay off the amount each month. So there is no balance. That what's I do with my mother. We only buy what is needed. Between health insurance and family all of mother's needs are met but the credit card interest rates are going to sky rocket along with everything else. Or, perhaps can you call and see if they can settle for any amount--it may be looked at as a charge off but I would nip it now if you could.
How about if you check out "Matt Lesko" online, there are all kinds of help with grants and financial assistance for debt. Try 211 or Dept. of Elderly Affairs.
There are programs that can provide what your mother needs--Veteran's Aid & Attendance, prescription programs, in fact Mark Cuban just came out with a Low Cost online pharmacy.
I know it's hard to keep all of the balls in the air but you can't assume anything and who knew I would be paying double for chicken at the supermarket.
Look at everyone's answers and see what works for you. If you buy anything online you need a credit card since it's never a good idea to put your debit online in case of hackers.
Also, credit cards are "unsecured debts." Meaning if there is nothing left for the credit card company to get, there is nothing to get. Unlike a mortgage or car loan (both secured debts) the lender can take the home or car back. And as others have said, if the credit cards are in her name only, ONLY she OR her estate (whatever is left) they may be in line (but others may be in line before those credit cards; including your state Medicaid program if she is or gets on Medicaid).
And if not done, take away those credit cards NOW! There should be no more spending, pay the minimum and no more if you want or just do not pay. What will the creditor do, cancel the card, give her a bad credit score? So what at this point.
Finally, one thing if not done is if there are any funds, pre pay all funeral expenses as funds can be used for that and prepaid funeral expenses do NOT count towards any problem with qualifying for Medicaid.
You are not responsible for your Mom's debt, but her estate is. Thus, if there are assets in the estate, the Probate Judge will assign the required funds to the creditors.