credit card walletBy far, the saddest cases in my years as a financial advisor were assisting widows after their spouses' deaths. Not only does a surviving spouse have a great deal to manage emotionally, but the financial burden can feel equally overwhelming.

Later in this article we'll take a look at who's responsible for a late spouse's credit card debt, but let's first address three important financial actions to take soon after the death of a spouse.

1. Alert credit agencies: Unfortunately, these days, the open, abandoned credit file of a deceased person is like a hand-engraved invitation for identity theft. So, the first step you should take in dealing with the deceased's finances is to alert the three major credit-reporting agencies -- Experian, Equifax, and TransUnion -- of the death. Experts at LowCards.com also advise you to request that a "deceased notice" and the explicit statement "Do not issue credit" be added to the decedent's file. To further protect your deceased spouse's identity, LowCards.com recommends you ask to be alerted if any new credit applications are made in your spouse's name. Make the requests in writing and include a certified copy of the death certificate. Keep copies of the letters for your records and send via certified mail.

2. Request a credit report: Get a copy of your spouse's credit report mailed to you. That way, you'll have a complete and up-to-date record of your spouse's open credit cards.

3. Contact creditors: Call the decedent's creditors to notify them of the death. They too will need copies of the death certificate mailed to them.

And the Bills Go To ... Whom?

Who is responsible for the outstanding credit card debt will depend on the type of account and where the deceased lived. Let's take a look at the specifics.

Joint account: If the account had both spouses' names on it, then the surviving spouse is responsible for any outstanding balance. In this case, the debts of the deceased are considered those of the surviving spouse. The surviving spouse can either close the account or have it titled in his or her name only.

Authorized users and second cardholders: A surviving spouse who was an authorized user or second cardholder is generally not responsible for payment on the credit card. The debts are considered those of the deceased only and are to be settled through the deceased's estate (a bit more on this later).

Individual account: Here's where it gets tricky. If the card was solely in your spouse's name, you are not personally responsible for the payment. However, assets and debts accrued during marriage are considered joint property in community-property states. So if you live in one of the 10 states where community property laws may apply -- Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin -- you could end up being responsible for the credit card debt. Check your state laws for more details.

When the Deceased's Estate Pays

If the surviving spouse isn't responsible for the debts, then they're paid from the deceased's estate. Assuming there are assets in the estate, then the executor -- the person in charge of handling the estate -- pays off the debt. If there aren't enough assets in the estate, the credit card company typically writes off the debt as a loss and the credit card is closed. For example, if the estate value totals $2,000 and the credit card debt is $10,000, the credit card company can't ask for more than what the estate is worth.

Here are a few more important tips:
  • Know your rights. According to the Credit Card Act of 2009, when an executor requests a credit card balance, the issuer is required to provide it within 30 days. Also, the issuer can't charge late fees or annual fees while the estate is being settled. And new Federal Trade Commission guidelines limit aggressive tactics for debt collectors trying to get money from the decedent's relatives.
  • Educate yourself. If you are a surviving spouse and want to learn more about different credit cards, sites like LowCards.com and NerdWallet.com are good resources.
  • Get more help if you need it. Go to Nolo.com for free legal information. Or contact an estate-planning attorney if you need further assistance. They can help guide you through the process. You can search for attorneys in your area using the American Bar Association's website.


Motley Fool contributor Nicole Seghetti feels for folks in these situations. She welcomes you to follow her on Twitter @NicoleSeghetti.

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39 Comments

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Betty Hayward

Is life insurance willed to spouse considered deceased estate?

January 31 2014 at 1:35 PM Report abuse rate up rate down Reply
GEORGE

HI

February 17 2013 at 7:21 PM Report abuse rate up rate down Reply
Susan

I did not read the story because regardless of what it says = I can tell you from experience that if your husband dies, as mine did and you THEN find out he had taken out a loan for $15,000 don't be stupid and call the bank (in my case the crooked Bank of America) and tell them you will try to make payments on the amount he owed. But then you will also lose his social security income cutting your income in half in spite of mortgage payments, and other legitimate expenses you DID know about, etc. BOA asked for my ss number ostensibly just to be sure it was his wife they were speaking to but it was all a lie, they then sued me using my SS# even though I had nothing to do with the loan and didn't even know of its existence. My husband had Alzheimer's disease for many years made no large purchases nor did we ever find any hidden cash here so I have no idea where that $$ went but do know that a judge openly stated he was not interested in hearing ANYTHING banged the gavel down and awarded that horrific company a judgement against ME for over $20.000!! the additional amount was supposedly THEIR atty fees and expenses! The entire thing was like a huge rape which then forced me into bankruptcy and cost me dearly - all on top of losing half of me that I had been married to for nearly 40 years- none of which matters to anyone. All that matters in America today is MONEY - the almighty dollar! So be warned....

February 17 2013 at 3:31 AM Report abuse rate up rate down Reply
money1238

Responding to Watcher, I will not fault you for having values and believing in personal responsibility, but your point of view strikes me as naive. Clearly in most, if not all states, there is no legal obligation to pay a spouse's debts for credit cards debts in all but the most unusual circumstances if that spouse was not a joint user. Authorized users are simply not obligated. Still I realize that feelings of ethical obligation do not always line up with actual legal obligations - or in this case of a non-joint signer spouse's credit card debt - the lack of legal obligations. I do not see a separate ethical obligation to pay off an institution charging the outrageously high interest rates and fees unique to credit cards when all other interest rates are dropping to record lows. In this case, the lack of legal obligation should negate any feeling of ethical obligation.

October 15 2012 at 9:39 PM Report abuse rate up rate down Reply
created14u2

Citibank customers, whether they are joint card holders, or authorized users, are responsible for that husband or wife's deceased debts. At Citi, there is not a third party in regards to our retail and credit products.
We have the right to demand payment at any time and for any reason. You, as user, of a Citi product or service and die, you are in default. Your death will be reported to the credit reporting agencies, eventually charged off as a bad debt, and the authorized user or joint card holder shall be sued.
We at Citi will implement a minimum interest rate of 34.24% (v), 30 days following the day your account is in a delinquent status. After all late fees, overlimit charges, finance fees have been assessed six months before chargeoff, your account is forwarded to a lawyer to implement court fees, costs, interest, and lawyer retainer fees.
Citi will find the authorized user or joint holder to sue the party, file a judgement, and satisfy it by wage garnishment, bank levy, or both. We at Citi do not outsource our collections anymore, but keep them inhouse to collect more money and make it easier to recover our losses.
Citibank Senior Executive Collections Operations Manager

October 07 2012 at 12:31 AM Report abuse +1 rate up rate down Reply
Mass Kumar

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September 10 2012 at 6:50 AM Report abuse -1 rate up rate down Reply
n1k2r3

As a surviving spouse, and all others who are also survivors of debt-ridden family members, YOU ARE NOT RESPONSIBLE FOR YOUR SPOUSE'S CREDIT CARD DEBT ! Unless you were connected at the hip, as in conjoined twins, you came into this world as a single individual, and you'll leave this world as a single individual.
If you name does not appear on the record, nor on the card's application, do not send in a penny towards your spouse's debt.
Your attorney will have the court issue a document to all creditors called: Notice to Debtors and Creditors.
Most have ninety-days to respond. If you don't have an attorney, ( not required) you can trot down to the courthouse yourself in the county where you and your souse were domiciled ( lived ). No need for contacting the Credit Reporting Agencies, they'll find out soon enough. No need to contact the creditor yourself; they'll find out when payments stop. You should contact the S.S. Administration, however, with a copy of the Death Certificate and enclosed letter from you stating his S.S. Number and his Date of Birth. Keep copies.
I went one step further, and had the court issue to me a new and separate Warranty Deed on my house.
Even though it was titled as JTWROS, I still had a new deed issued to me.
You will get endless telephone calls, threats, and dunning letters. Keep calm. Stand your ground. DO NOT
PAY YOUR SPOUSE'S DEBTS.
Kicker: If you HAD filed your Income Tax Return as Married Filing Jointly, You may receive a 1099 C. Depending upon the year of the debt, you may or may not have to include the 1099 C on YOUR next Return. You still file Married Filing Jointly on April 15, in the year after the death, for the previous year. After that, you are considered Single/ There is no Category or Filing Status called : Widowed.

September 07 2012 at 1:12 AM Report abuse rate up rate down Reply
1 reply to n1k2r3's comment
Watcher

Sorry I didn't read this earlier. I couldn't disagree more. I am now paying off the last of my late wife's personal debts. These companies trusted her, and I trust her that she borrowed or charged this money in good faith that she would pay them back. I feel this is part of honoring her memory. She was an honest lady. I find nik2r3's advice repugnant.

October 02 2012 at 10:31 PM Report abuse -3 rate up rate down Reply
1 reply to Watcher's comment
Watcher

The -1 is from me. i was too harse in my original comments. n1k put a lot of effort into giving us good advice. It is just that I regret Nik's tone. I can only speak for myself when I say that I feel an emotional and ethical reason to pay these debts -- and I have one large one left to pay. Sorry, no personal offense intended.
From Watcher

October 03 2012 at 11:12 AM Report abuse -1 rate up rate down
eyedocandynj53

IF YOU WOULD LE TO KNOW HOW TO ACCOMPLISH THIS EMAIL ME AT AOL. FEE OR BARTER REQUIRED FOR INFO

September 06 2012 at 11:58 PM Report abuse -1 rate up rate down Reply
eyedocandynj53

I DONT EVEN PAY MY MORTGAGE AND YET THEY CANNOT TAKE THE HOUSE...WHY U MAY ASK?...IM SMART AND KNOW HOW TO GET AWAY WITH IT

September 06 2012 at 11:56 PM Report abuse -2 rate up rate down Reply
eyedocandynj53

SOMEBODY PLEASE GIVE ME AN UNSECURED LOAN

September 06 2012 at 11:55 PM Report abuse -2 rate up rate down Reply