A reader's wife is wondering what happens to her mom's assets — and debts.

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Question: I have a question that I couldn’t get a straight answer for. My mother in law just recently passed away. She didn’t have many assets, other than a small pension and life insurance from work. 

She DID have some money in her credit union that has my wife as a joint account holder. My mother in law also had a credit card from the credit union that has a balance. My wife is NOT on the credit card, just the checking account.

Will the credit union just take the amount of the balance out of the account? Or do they have to go through the courts to get payment?

— JP in California

Howard Dvorkin answers…

First of all, my condolences on the passing of your mother-in-law. Second, this isn’t what you wish to hear: You should consult an attorney.

Why? Because there are some complicated variables at work here.

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Typically, when someone dies, any outstanding debt is a liability of their estate. If that person dies with money in the bank, that money pays off those debts. What if there’s no money left at all? Creditors will attach a claim to the estate, but it’s not usually worth their time to pursue it.

Normally, most credit card applications include a clause that allows the financial institution to attach other assets held by the same financial institution. In other words, your mother-in-law’s credit union might have rules that allow it to take money from the joint bank account to pay off the credit card.

Notice how I use words like “typically,” “usually,” and “normally.” That’s because I’m not sure what rules your particular credit union has. I also don’t know if the title of the bank account is “joint tenancy with right of survivorship.” If so, I believe the funds can’t be confiscated by the creditor.

I urge you to contact a lawyer who has experience in estates, because each state can have different laws.

One possibility, but with a big warning…

You might consider withdrawing all the funds in the joint account so no one can get to them first. However, I don’t know which of the two owners actually contributed the money to the bank account. You could get yourself in a bind if it was your mother-in-law — you might be breaking a law. So you can see why I’m so adamant that you consult an attorney.

Finally, you need to consider the return on your time and expenses. You don’t say how much money is in the joint bank account, or how much is owed on the credit card. If the amounts are smaller than an attorney’s fee, you might want to forget the whole thing.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

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Meet the Author

Howard Dvorkin, CPA

Howard Dvorkin

CPA and Chairman

Dvorkin is the author of Credit Hell and Power Up, founder of Consolidated Credit, and Chairman of Debt.com.

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Article last modified on April 18, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: My Mother In Law Just Died, So What Happens To Her Credit Cards? - AMP.