Debt after death: Banks chase down mourners

[AngelinaCatHub]

So does a debt compound with interest and penalties while waiting for probate? If not, then it is in the best interest of the inheritors to not do anything to assist the creditors and simply let the probate process take are of it. If it is, and the estate has enough non-exempt assets to cover the dent, then it is in the best interest of the inheritors to pay it off ASAP (or ASAP as possible.)

For a community state situation, is debt encumbered before marriage a liability for the spouse?

I'm wondering - is a retirement account exempt from seizure by a creditor?

I would assume it would be protected as it is in BK and against seizure in a suit by a creditor. 'Hub

[keepmine]

I think unless, you're dealing with a complicated trust or community propety state issues most married couples are pretty much protected against the debts of a spouse upon the spouses death just by the way most married couples title property.
As has been mentioned, life insurance is paid directly to a beneficary bypassing probate. Also, when you open an IRA or 401K you are asked to name a beneficary. Most married couples own homes as Joint Tenant with right of survivorship. Same designation with bank and brokerage accounts. Upon death, assets titled like this go directly to the surviving spouse.
Just be certain you don't name your estate as a beneficary without a really good reason.

[Flamingo]

Did you even bother to read the article dear Flamingo?



This isn't about the estate. It's about creditors trying to trick innocent third-parties into taking over debt they do not owe. This happened when my father died. My mom got phone calls within a week telling her that she owed the debt. Not the estate. My mom. The only reason that this is being offered as an "opportunity" is because it's in writing. But the intent is the same.

Thankfully, my mother mentioned it to me and I set her straight because she was about to send them money from her personal account.

.

This is true but proper estate planning should be able to avoid paying most if not all general unsecured debt such as credit cards.

Yes "dear ttg1," I read the article and have been through several estate and bill issues over the years...that is why I state in my posting for everyone to educate themselves as much as possible about the process because bills are an inevitable part of estate planning and everyone deals with them after a death. A lot of things/issues can be avoided if one does a little homework prior to those calls coming in....

[JackBondLove]

I would assume it would be protected as it is in BK and against seizure in a suit by a creditor. 'Hub

What I mean is what if the deceased had an IRA with a beneficiary and debt. Would the amount transferred to the beneficiary be confiscated to pay that debt? I would think that since the transfer would not go through probate, that it would not be confiscated.

[radio123]

Banks

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[MakinMeCrazy]

hello.......I live in OHIO
My mother passed away over 2 yeras ago...at the time she died she had a lot of CC debt.......as they called our house because she lived with us.......I told each and everyone......
she is deceased and I am not responsible for her debts.....do not call again !

well no more calls except from Discover card......when they called I started to tell them I am not responsible and the lady told me.......I am only calling for information so we can close this account...she wanted me to confirm only the date of her death.

So my advice is Tell THEM you are NOT responsible even if you are an authorized used!!!!!

[rta]

Can anybody refer me to research links on community property estate issues? I do have a term life policy naming my husband as primary beneficiary, and I wonder if my unsecured CC bills (he is not an authorized user) will become his responsibility should I pass on ahead of him. Thanks much.

rta/Estella

[treehugger1]

JackBond, I just heard of an instance here where I live where creditors and CA's attempted to go after the retirement accounts and pensions of a deceased person. From what I understand, the retirement exemptions here did not go away because the party died. The funds were still exempt upon death. I am sure these funds were "qualified" exempt retirement/pension accounts under my state laws. The beneficiary received all of the exempt retirement funds. I don't know the exact details, but it appears exemptions from seizure are still valid; living or dead. This is a very good question. As always, different states will have different statutes. This would be a great question to ask an attorney who practices estate/probate law in your state.

[GoingDown]

Having personally dealt with the issue of the death of a relative and dealing with an insolvent estate and being hounded by creditors, I have the following things to say about it:

1. DON'T TALK TO THEM!!! As soon as someone dies, cancel their phone immediately! And never speak to debt collectors about anything regarding the estate over the phone. Never tell them your name. Never give them any information. They are relying on voluntarily compliance on your part. They will never open probate by themselves. They are waiting for you to open probate. (Don't open probate by the way! Once you open probate, all the creditors have to do is file claims against the estate in probate court, and then you have to pay them or prorate them and you then risk being sued by creditors because you then take on a legally binding fiduciary responsibility for the debt!). They will never file a lawsuit. They just bluff their way through. But take away their power by never speaking to them. And if they do get your phone number somehow, send them a cease and desist communications letter that has the phone number they are calling, but don't give them your real name in the letter. Never use your real name! I cannot overstress the importance of this! They will keep asking the following question: "May I speak to the person handling the affairs of the late _______________ ?" But they don't have a clue who you are unless you tell them who you are.

2. It's a land rush once someone dies! I've been told not to go into too many details about this part by various people (SO IGNORE THIS PART IF YOU DON'T FEEL UP TO IT), but just think about it for a minute. The creditors don't know who you are. They don't know hardly anything about the deceased person's assets and personal possessions. They won't know what happened to the assets unless you tell them about it. They don't even know to look for them, because they don't know they exist, in most cases. When they run into a brick wall of silence from you, they don't how to deal with it. In my experience with this situation, they make all kinds of threats, but never follow through on any of them. And even better, if you make it so they can't call you, they can't even make the threats.

The deceased person I am talking about had literally hundreds of thousands of dollars in credit card debts, so if they were going to sue over it, they surely would have done that back then. They never did a thing other than make lots of phone calls, send out scary sounding letters, and then eventually just give up on the whole thing entirely.

[rta]

Thanks Going Down,

It makes a lot of sense. It's a continuation of not speaking to debt collectors. I also saw in my term life policy that they won't allow proceeds to go to a creditor rather than to the actual beneficiary. But as you said, a creditor wouldn't know about these things, unless you tell them.