End of life planning is a natural part of personal finance – even if few people want to tackle the issue. As people live longer, the cost of living becomes more expensive, and retirement plans run out of cash earlier and earlier, more people turn to credit cards to finance their expenses.
This can make for a tricky problem after death, when balances are supposed to be settled. Ordinarily, a credit card should be included in a person’s estate. If there is enough cash to pay for the cardholder’s debts, the debt is repaid in full. If not, the estate simply declares that the bill cannot be paid, and a credit card company has to write off the debt.
Credit card debt cannot be inherited, and it does not need to be repaid by survivors if it is the debt of the deceased debtor and the deceased debtor only. Here are a few things that can trigger the requirement to repay:
1. Used after death – If a credit card is used after the death of the cardholder, the debt is then passed on to the person who last used the card. Never use any credit card from any other person after their death, even if it is to pay other bills in the debtor’s name.
2. Joint accounts – Accounts owned by two or more people are passed on to the surviving cosigners. As people age and begin to plan out the full extent of their personal finance futures, attention should be paid to joint accounts and consigners.
Unless you have a cosigner on a credit card, or the card is used after death, the card should be repaid by the estate. Otherwise, the debt on the card should be promptly canceled by the credit card company.