upon death who is responsable for payment of debt?

[unknown_entity]

All that is usually required to relieve the debt, is a death certificate.  Although the estate is a legal extension of a deceased persons assets, CCC's rarely see estates as a fruit filled tree, the reason being: if someone has a lot of debt at their time of death, usually, the odds of there being anything left for them after everything else is paid, are slim and none.  Unsecured debt is just that, unsecured debt.  With unpaid items that are secured, like car loans and such, the creditor can repo the property or, in most cases, they just hold the title until the debt is paid, if ever.  Bottom Line, You cannot be held responsible for anyone elses debt unless you are a joint account holder or a co-signer.  Estates with oodles of assets generally have less debt are usually handled by attorneys who dole out the payments according to that particular states probate laws.

[Cleanmachine]

With all due respect, PLEASE do not take this personal.

Gettintherequick your post, in my opinion is totally incorrect.

A beneficiary of an Estate can not be held liable by law for any financial obligation of a decedent.

If a named beneficiary of a life insurance policy is found to be deceased the value of the policy becomes the property of the estate of the named beneficiary by law.

If the beneficiary of a life insurance policy is not located, then the value of the policy is placed in an Escheat Account in the State of the last know address of the beneficiary.

In any case, always consult with an attorney who specializes in Estates.

[Cleanmachine]

maxxturin

That all depends on the State Estate Laws in which your sister and her husband lived at the time of death.

If you sister was a co-owner of the loan and credit cards, she is responsible for the debt.

If she was an authorized user of the account and the creditor can prove that she was the purchaser and benefited from the purchase, she (COULD) be held responsible.

Being the beneficiary of the life insurance policy would have no legal standing as to responsibility.

I suggest you both call it a draw since the statement could go either way.

[Anonymous]

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@unknown_entity wrote:

Bottom Line, You cannot be held responsible for anyone elses debt unless you are a joint account holder or a co-signer. 

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What if the State is a "community property" state? I have been trying to find this out, since I brought debt to the marriage, and live in a community property state (Calif). I thought I read that if I were to die my husband would be responsible for all of the debt, not just that which he is a joint acct. holder. because of the community property issue. I would love to know about this because I have been thinking I should get a life insurance policy so that my husband doesn't get stuck with my debts, if god forbid, I kick the bucket.

[KingAdrock]

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Cheezy wrote: What if the State is a "community property" state? I have been trying to find this out, since I brought debt to the marriage, and live in a community property state (Calif). I thought I read that if I were to die my husband would be responsible for all of the debt, not just that which he is a joint acct. holder. because of the community property issue. I would love to know about this because I have been thinking I should get a life insurance policy so that my husband doesn't get stuck with my debts, if god forbid, I kick the bucket.

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I also live in CA, and AFAIK debts DO generally transer to a surviving spouse, along with the assets. (although IANAL)

[unknown_entity]

I'm pretty sure if it's not a joint account the creditor is out of luck.  Although you should check with an attorney in your state to determine ultimate responsibility.

[Anonymous]

As far as credit card debt goes, as long a person has payment protection then its supposed to be paid by the payment protection insurer upon the person death.

[KingAdrock]

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WiseYoungMan21 wrote: As far as credit card debt goes, as long a person has payment protection then its supposed to be paid by the payment protection insurer upon the person death.

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That's of course IF you get payment protection, which only makes sense if you are certain someone else will be responsible for your debts after your death. I don't bother.

[Anonymous]

Life insurance proceeds can go directly to the beneficiaries without regard to the debts of the deceased or probate court. In fact, the problem with life insurance proceeds is not with an estate with too much debt, it's with an estate with too much assets. Life insurance can be considered as part of the estate and can count towards the net estate worth when determining estate taxes. So if an estate is worth $2M and a life insurance policy adds an additional $1M, then that entire amount is subject to estate taxes, which start at 39% and quickly increase to 55%. The best way to avoid this is to work with an accountant or an estate planning attorney, who can structure the ownership and payment of the life insurance policy in a manner that places it "outside" the estate, therefore avoiding the estate tax.

One more thing to keep in mind with regard to life insurance and mortgages specifically. Everyone receives these offers for "mortgage protection plans" in the mail. A lot of times they are misleading because they are designed to fool people to think it's from their mortgage company. These marketing scams usually sell expensive term life policies that are marketed as "mortgage protection." Don't fall for this. Just go to a reputable term life insurance quoting website (edited to remove commercial link) and get quotes from reputable, financially sound companies that offer the best rates for term life insurance. You'll be much better off. 

edit: please don't post links to commercial sites.  --hauling

Message Edited by haulingthescoreup on 09-22-2008 11:48 AM

[jmbfl]

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Cheezy wrote:
What if the State is a "community property" state? I have been trying to find this out, since I brought debt to the marriage, and live in a community property state (Calif). I thought I read that if I were to die my husband would be responsible for all of the debt, not just that which he is a joint acct. holder. because of the community property issue. I would love to know about this because I have been thinking I should get a life insurance policy so that my husband doesn't get stuck with my debts, if god forbid, I kick the bucket.

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Assets owned previous to a marriage are not community property, so why on earth would a debt incurred prior to a marriage be community property. Assets your spouse owned prior to the marriage pass to you upon their death not because they are community property, but due to inheretance. In a community property state you are responsible for the debts your spouse incurs during the marriage unless is it legally disavowed. There is a well established procedure for this in WI.

Of course you have to be in a position to prove that the debt was incurred prior to the marriage. Furthermore, if it is revolving debt and you bought something on a charge card you opened prior to the marriage, but bought it during the marriage (whether it benefited the marriage or not) is it community property or not?

Here are just a few references...

http://family-law.freeadvice.com/divorce_law/debt_incurred_marriage_divided.htm

http://family-law.freeadvice.com/divorce_law/community_property.htm

http://family-law.freeadvice.com/divorce_law/husband_payments_responsible.htm

http://www.bills.com/blog/credit-card-debt-and-community-property-law/

http://en.wikipedia.org/wiki/Community_property

Message Edited by jmbfl on 09-22-2008 01:29 PM