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Credit card debt and estate planning

Estate planning in Nevada and elsewhere requires taking into account several different factors affecting the estate. One of those factors is credit card debt. If estate planning is managed properly, then loved ones and survivors of the deceased will not have to worry about paying off the decedent's credit card debt with their own assets. Yet all too often, estate planning is not managed properly.

Many, if not most, people die with some amount of credit card debt. That leaves open the question of what happens to that debt afterwards. If the credit card was the sole property of the decedent, then that debt effectively dies with them. On the other hand, if the credit card is shared jointly with someone else such as a spouse, then that other person is left having to pay off the entire debt.

However, in both cases the estate of the decedent can be forced to pay off a portion or all of debt. First, creditors need to quickly inform the executor of the estate about their claims. Secondly, while the estate is being settled, the creditor cannot tack on more fees and penalties. Although these two provisions are slanted in favor of debtors, it is important to remember that creditors ultimately take first in any of the estate proceeds. That means that the assets of the estate go to creditors first and the heirs get whatever is left.

Proper estate planning may be able to ensure that any credit card debt will not negatively affect the estate or heirs of the estate. Even young and healthy Nevada residents may well benefit from consulting an experienced probate attorney. The attorney may be able to assist with creating an estate plan that minimizes costs while maximizing the inheritances left to loved ones.

Source: The Zimbabwe Tribune, "What happens to credit card debt after death," Dana Dratch, Oct 13, 2011

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