Can an executor use deceased's credit card?

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

Dear To Her Credit,
After my older sister died, the trustee took her credit card and took out over $3,000 before the bank was notified of my sister's death. In addition, the trustee paid for my sister's interment at the cemetery with my sister's credit card and then was reimbursed by her estate. Is this not fraud? -- Donna

Answer for the expert

Dear Donna,
It's either fraud or sloppy handling of your sister's affairs. Laws vary by state, but when someone dies, survivors and other authorized persons must follow specific rules and account for all expenditures and withdrawals. They can't just start dipping into accounts.

Unfortunately, many people don't think they're obligated to follow the rules. "My suspicion is that when she died, they ignored the will, and somebody took it upon themselves to resolve the estate," says attorney Steven S. Camp, a partner of  Gardere Wynne Sewell in Dallas.

Camp often sees cases where somebody thinks they'll save money on legal fees and just divvy up the leftovers. "We get people who want to sell Daddy's house. It hasn't been through probate. Their assertion is, 'I'm his only surviving child, so I get to sell the house.'" Camp has news for them. "No, you don't, unless the court says you can. There's got to be filings, and there's got to be accountability."

The trustee (or executor, Camp surmises) should not have used your sister's credit card after she died. The right way to handle finances after death is to take the death certificate and other authorizing information to a bank and open an estate account. It's also acceptable for the executor or a family member to pay immediate final expenses from their own accounts and then be reimbursed by the estate. The courts give burial and other final expenses top priority, so there shouldn't be any problem getting reimbursed in most cases.

If a person gives permission for someone else to use a credit card while she is alive, sometimes the authorized user assumes he or she can continue to use it after the account holder dies. Not so, says Camp. "The credit card may be in my name, and I may give my son permission to use it. But if I die, that permission does not survive my death."

It's odd that you say the trustee used the card for burial expenses, and then received personal reimbursement. Either there's a misunderstanding here or someone is lining his pockets. Camp says, "The funeral expenses were for the benefit of the estate and should be repaid to the credit card company by the estate. The executor would have no right to reimbursement for those expenses, unless the executor actually incurred the expense."

You don't say where the $3,000 went. Sometimes people think they're reimbursing themselves for past expenses, or they're just getting paid for their time and trouble. If the trustee took the money without authorization from the court, no matter how she justified it, she stole from the estate. All expenditures and distributions must have the authority and sanction of the probate court.

It's sad, but death does seem to bring out the worst in families. Emotions are raw, and if family members don't argue about the funeral or who gets the teacups, they can still get crossways over where the money goes. Family members are not the only parties with an interest in an estate. Creditors also have a right to receive their fair share of the estate and may press their case if they don't think they will. That's why it's so important that everything is done and accounted for under the supervision of the court.

Camp says, "My advice would be to seek the legal advice of counsel to investigate the handling of the estate and the filings that have been made in connection with the probate of the deceased party's estate." Your sister would not have wanted her finances to be plundered the moment she passed away. You have a duty to her and to her creditors and beneficiaries to see that her estate is handled properly and her wishes are honored.

See related: What happens to credit card debt after death?, Credit card law compels speedy estate settlement for debt after death

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Updated: 01-23-2019