Is Dad responsible for stepmom's credit card debt after her death?

It comes down to who signed the contract and what state they're in

By Gary Foreman

The New Frugal You

Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters. He writes "New Frugal You," a weekly Q&A column about frugal living, for CreditCards.com Ask a question. 'New Frugal You' archive

Dear New Frugal You,
My stepmom passed away. She had credit card debts. Is my dad responsible for them? They are all in her name.
-- Asking for Dad

Dear Asking,
This is a case in which creditors can seem like vultures, circling when you've lost a loved one, becoming ever more insistent when you're least able to think clearly.

Let's see if we can help you determine if your dad is at risk.

The first thing to check is who owns the credit card accounts and who is responsible for them. That doesn't depend on whose name is on the piece of plastic in your wallet. Check the credit card statement, credit report or both to see how the account is titled. Perhaps you'll find that your stepmom alone was responsible.

Your dad may have had a card that was charged to the account. That makes him an "authorized user," but does not necessarily mean he's responsible for the debts.

Whether he had a card or not, to be liable for the balance he would have had to sign an agreement saying that he was responsible. Ask him. If he doesn't remember, the executor of the estate can contact the credit card company to find out.

If your father agreed to be responsible, then your stepmom's passing won't release him. He'll have to pay the balance.

On the other hand, if your stepmother was the only person responsible for the account then her estate will be liable for the debts. Seems like it should be pretty easy from here to figure things out. Right? Well, if you'll look overhead, you'll see they're still circling.

When credit card companies learn that one of their cardholders has died with a balance due, they go into overdrive. This is their last chance to collect the debt. So don't be surprised to get letters and phone calls demanding payment. They may come after your father, even if he is not responsible for the account.

The simplest way to get rid of them is to to have your father send creditors a registered letter informing them that he does not want to be contacted and that they will be paid from the estate. If they contact your dad after that with anything more than a mailed statement on the account, they'll be violating the Fair Debt Collection Practices Act.

Time for a deep breath. You've chased off the vultures, but wait ... another group lands nearby. And, these birds have designs on the estate.

An estate is just a fancy way of saying everything that your stepmother owned or partially owned at the time of her death. It's up to the executor of the estate to collect all those assets and then distribute them -- first to legal creditors, then per her last will.

That's when the trouble starts. State law can make a big difference in deciding which assets belonged to your stepmother's estate. That's especially true in "community property" states, in which assets and debts accumulated during marriage belong to both spouses. A debt in your stepmother's name would be his, whether he signed the agreement or not. Likewise, an asset titled solely in your father's name might not be entirely his if it was purchased after they were married. It all depends on state law, and there are variations among community property states. This is an area where legal help may be required.

Even in states without community property laws, determining who owns what can be a bit dicey. A second marriage makes it more difficult.

But, the real kicker is that in some states, if the estate doesn't have enough money and the creditors are paid off in the wrong order, creditors can harrass the executor for an unpaid debt.

Bottom line: There's a good chance that your dad won't have to pay your stepmom's debts out of his own assets. But, you'll almost certainly need a lawyer to settle the estate. And, you can expect to pay the lawyers for their help.

As to those birds flying overhead, you're probably stuck with them until the estate closes. 

See related:  Debts and how to handle them, Know your rights under the Fair Debt Collection Practices Act, What happens to credit card debt after death, An interactive look at your new credit card statement

For more than 35 years, Gary Foreman has worked to help people get the most for their money. Prior to founding The Dollar Stretcher.com, he was a financial planner and purchasing manager. Gary began The Dollar Stretcher website and newsletters in April 1996. Today the website features more than 6,000 articles on different ways to live better for less. Gary has been interviewed by The Wall Street Journal, The Nightly Business Report, USA Today, Reader's Digest and other newspapers and magazines. Gary answers a question about a budgeting or saving issue from a CreditCards.com reader each week. Send your question to The New Frugal You.

Published: July 29, 2010

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