A relative and I have opened up a checking account at the bank, in order that I be able to assist her with her finances. When she passes away, will I be responsible for her debts? Her house is paid off, other than water, power, and a few credit card bills, she doesn’t owe anything major. But since my name is on the account, would I be responsible for paying off the balance of her credit cards? Would this affect my own credit? Should I contact a lawyer?
I am in New York State. I ask because this must have happened with someone on the SD. I’ve tried to find out on the internet but either read conflicting answers or just get confused with a lot of legal talk.
I have heard stories about joint accounts being frozen when the bank finds out one of the account holders dies. Typically, this means the widow suddenly has no money because the husband ran the finances and they were all in the common account.
The question would be - whose name are the debts in? Is it a credit card you also signed for? is this account all her money?
You might also ask about the tax implications, if it looks like you are somehow able to spend someone else’s money. how is this different from a gift?
IANAL but as I understand it, you or the deceased executor would be responsible for settling up any bills from the estate. If your relative dies leaving $50K in the bank and $40K in bills that doesent mean you grab the $50K and let the creditors fight over the $1.47 you left in the account. It is not your money, just money you help steward.
My name is NOT on her credit card. That’s the one thing I was concerned about. I have my own credit card(s) and pay from my own checking account. I won’t be the executor of any estate of hers that will be left. When she dies, her source of income will stop and I assume we would use whatever is left in her checking to pay for the funeral, keep the electricity in her house on , and pay off as many outstanding bills as possible.
My dad and I had a joint checking account, and when he died, the checking account WAS frozen, for about a week if I remember.My lawyer was able to get it un-frozen and all was well after that.
I was not responsible for his debts, except for the medical bills. Not even sure I would have HAD to pay those, but as they came in, I did.
If you are not the executor of her estate, ther’s a good chance the account will be frozen when the bank discovers she’s dead, until the executor does their thing - so you won’t be able to pay any of her remaining bills anyway at that point.
(a) She should have a will and name someone executor. Otherwise the government will do their thing, and I imagine the government-appointed executor gets reimbursed from her estate at government rates…
(b) You may want to keep track of what you took from the account and why, so the executor does not come after you for reimbursement of poorly documented expenditures.
I had to go thru this for my Dad last year. He had the forsight to add me as a signer for his checking account, meaning I was able to write checks from his account if he was unable, but my name was not on the account itself. I did contact a lawyer after he passed away and she informed me in no uncertain terms that his debt was not going to be my debt (in CA). Fortunately, he did not have a lot of complicated finances - just his personal checking and savings, as well as his investment income accounts. No real estate, just the accounts and his belongings.
After he passed, I had no issue paying off his last bills from his checking account, and kept the account open for a few months in order to catch anything else that came about. I kept track of everything that was paid and from what account. I wanted to keep his finances separate from mine for as long as possible. I was not on his credit cards at all. Once I stopped receiving bills and expenses, I closed the checking account and moved the remaining funds (a few hundred dollars) into my own account. Also, I was executor in the will.
There are a ton of other things you may need to take care of that will be loose ends - Social Security - they may want some of their money back from the last payment made to your relative - it may have been direct-deposited into their account. You also need to file a final tax statement, close down all health insurance and Medicare accounts, services and utilities, etc. None of this will affect YOUR credit, but you may need to do this.
My name was on my father’s checking account, and they did not freeze the account, and I used the money in there to pay his final bills. I did go to the bank immediately and tell them what had happened, but they were very helpful and perhaps because my name had been on there for several years there was no problem. (I still wonder why he didn’t put my name on the safety deposit box, wherein was the original of his will; I had to wait several days for a death certificate to get in there.)
I agree with the other non-lawyers that the assets of the estate are used to cover debts of the deceased, until the assets run out (if they do). If the assets run out, some debt-holders are going to be SOL, they can’t come after anyone else (well, they can try, but it’s not legal). If there are assets left over then they get distributed to the heirs.
If this was truly a joint account (i.e. both of you put money in and both used the money for your own expenses) then you might have trouble proving how much of the account contents might actually belong to you. But if it was just that your name was on the account and you never put money in it, then all the money in the account belongs to the estate. It then becomes the executor’s responsibility to conserve this asset and to pay bills from it as appropriate.
What I found was that the executor (in my father’s case that was me) and anyone else who happen to be holding onto assets at the time of death operate pretty much on the honor system, unless one of the debt-holders or heirs decides to challenge their actions, so I always kept records of what expenses and bills the estate’s money was spent for.
Seconding all the stuff that snowthx said. Some of the notifications require a certified death certificate, some accept photocopies (and this is for the executor or family to do, so it may not apply to you).
Roddy
Well, there’s more confusion, now I don’t know now if my name IS on the account or not! My name is on the checks and the monthly bank statements, I can call the bank and get a balance (or look it up online), take money out for expenses as needed (gas, groceries). I don’t deposit money or use the account for my own bills… My relative has a will, my brother will be the executor. I’m hoping he knows a lot about what should be done following a death in the family as his in-laws both passed away.
I’m also hoping the funeral director will know about tying up the loose ends, at least that’s what I’ve heard, it’s something they do.