Is an executor responsible for paying off credit card debt? (2024)

FAQs

Is an executor responsible for paying off credit card debt? ›

If you are the executor, it's your responsibility to figure out how to pay creditors by drawing on the money and holdings in the estate. You are not responsible for using your own money to pay off those debts.

The probate court or state law will provide a deadline for creditors to make formal claims or dispute an executor's decision not to pay a claim. Sometimes a creditor also will make a claim against a beneficiary, since estate debts transfer to them in proportion to what they inherited, but this is uncommon.

Generally, when someone passes away, any outstanding debts are paid through cash and other assets in their estate. This process is handled by the executor of their will or trust.

It's important to remember that credit card debt does not automatically go away when someone dies. It must be paid by the estate or the co-signers on the account.

If there isn't any money left to pay creditors, on the other hand, you simply inform them of that fact and they have to write off the balance as bad debt. As an executor, you aren't personally responsible for paying the deceased debts, unless you cosigned on a loan or are a joint account holder on a credit card.

The creditors can make claims against the estate for the amount of any debts. The total estate gets reduced by the amount of debts owed. If the debts exceed the estate assets, then each creditor will receive partial repayment of the debt owed to it. But in this situation, the heirs will receive nothing.

If the personal representative distributes money to heirs when debt is outstanding, a creditor can file a claim or lawsuit against: The heir(s) for the return of the money; or. The estate executor or personal representative if the individual refuses to file a petition to have the heir turn over the money to the estate.

The CARD Act of 2009 says that the card issuer must promptly notify the estate executor if any balance is due, and the issuer can't add any more fees or penalties while the estate is being settled. But if there isn't enough money in the estate to cover credit card balances, the card issuer may be out of luck.

California law does allow creditors to pursue a decedent's potentially inheritable assets. In the event an estate does not possess or contain adequate assets to fulfill a valid creditor claim, creditors can look to assets in which heirs might possess interest, if: The assets are joint accounts.

Paying off high-interest debts such as credit card debt is one good use for an inheritance.

How long is an executor liable? ›

Executor's Liabilities

Claims may be brought against the executor in relation to the estate for up to 12 years after the death of the estate owner has been registered.

If beneficiaries proceed to bring a breach of duty claim against them, and the beneficiaries win, the executor could be held liable for paying damages from their own pockets for their executor misconduct. This is why many executors hire a skilled probate attorney to assist them with their executor of estate duties.

The duties of an executor include the identification and collection of the assets of the estate, the safeguarding and investment of those assets pending distribution to beneficiaries, the payment of debts and liabilities owed by the estate, the filing of appropriate tax returns for the deceased and the estate, and ...

However, this depends on various factors, including state laws and specific provisions within the trust document. Executors and successor trustees have significant discretion in forgiving debts owed by beneficiaries to the decedent if they deem it appropriate under the circ*mstances.