Authorized user not responsible for deceased company president’s debt
Your Business Credit
Dear Your Business Credit,
The president of my C corporation died and there are a lot of credit cards under her name. I am an authorized user for those cards. Am I responsible for paying off these credit cards? – Caroline
Generally speaking, authorized users are not liable for the debt on the primary cardholder's account, as I discussed in an earlier column, “Paying deceased’s bill doesn’t imply liability for authorized user.” However, it is important to double-check that you are actually an authorized user and not a joint account holder. As a joint account holder, you would have had to sign the credit card agreement. As I mentioned in that column, if you don’t remember whether you signed these agreements, you can check a credit report from one of the major credit bureaus (Experian, TransUnion and Equifax). These will state whether you are an authorized user or joint account holder.
You did not say whether you own the business or are an employee. If you are the owner, I would recommend that you pay the debts. When you or an employee borrow money for your company, you have an obligation to pay the debts, even if you are not legally liable for them. If you are an employee, I would refer this matter to the owner of the company.
Meanwhile, I would recommend that your company ask the executor on the president’s estate to contact the credit card issuers, let them know that your president has died and, after any balances are paid, arrange to close the cards. (For more information on what to do when a cardholder dies, you may want to read “What happens to credit card debt after death.”)
If you own the business and need credit, open new cards in your own name. This will give you an opportunity to build business credit in your own name, which could come in handy if you someday need more financing. Lenders generally issue business credit based on the personal credit of the owner. In the meantime, I’d suggest contacting your major suppliers and vendors and switching any existing, ongoing charges to a card in your name, so you don’t miss payments on any important services you need.
No one wants to think about the death of a key executive, but your letter is a good reminder of how important it is for businesses to have plans in place in case of situations like this. It is essential to keep good records of any credit that has been taken out on behalf of a business and any paperwork that has been signed for credit cards and loans in a secure place. It can be very time consuming to track down this information if only one person in the company had access and that person is now deceased. Fortunately, it looks like you do have the information you need at hand. Best wishes as you adjust to running the company without your president.
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Published: May 16, 2016
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