When Someone Dies

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Chapter 1: As Death Approaches
Checklist:
• Who's in charge before the death?
• Does the person have an advance medical directive, also called a durable power of attorney for health care?
• If the person prepared an advance directive/durable power of attorney for health care...
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Q
My sister just died and she had about $700 in the bank, furniture in her apartment and a bunch of clothes. She owes two credit card companies around $22,000. Do I need to pay off my sister’s credit cards after she dies?
A

The simple answer is ‘no,’ and do not let credit card companies try to convince you otherwise. The only person responsible for your sister’s debts is your sister ( or potentially her husband if they comingled assets or lived in a state that recognizes community property).  Credit card companies only care about liquid assets. They rarely go after furniture and clothes because it’s just not worth the hassle. So, in this case, technically, the $700 should be given to the credit card company. But that’s all because no one is responsible for the rest of her bills.  If a person dies and has liquid assets—cash, stocks, a 401(k)—sufficient to cover her debts AND you receive that money, then you are legally obligated to pay the debts of the person up to the amount of the cash value of the liquid assets you received. However, if the estate is small enough so that a probate proceeding is not required, even then credit card companies rarely pursue heirs. The smart thing to do is to send back a recent credit card bill with a photocopy of your sister’s death certificate. Normally, the credit card company will go away. If they continue to pursue you, AND you have some money from your sister, you should pay but only up to the $700.

Related Chapter: The Days and Weeks after the Death: Financial Issues

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