This reader isn’t planning to go anywhere, he’s just curious.

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Question: My grandmother died recently, leaving me and my brother a few thousand dollars. After reading your website, I used most of the money to pay off my credit cards. (I admit I spent the rest on a fancy dinner with my girlfriend.)

So my question isn’t about money, really. It’s a hypothetical: My grandmother used cash for everything and never even had a credit card in her name. But what if she would have died with $20,000 in credit card debt? What happens to credit card debt when you die? Since we were named in her will, would my brother and me be forced to pay that?

— Chris in Nashville

Howard Dvorkin CPA answers…

First, I must tell you: I’m happy you took your girlfriend out for a nice dinner. It’s a common misconception that financial experts are boring stuffed suits who don’t want anyone to have fun.

The whole point of being responsible with your money is to have fun, whether it’s enjoying a nice family vacation, taking care of that family’s financial needs, or just savoring the peace of mind that comes from being debt-free.

Now to answer your question — which, of course, comes with some caveats. I’ll quote the Federal Trade Commission, which says…

After a relative dies, the last thing grieving family members want are calls from debt collectors asking them to pay a loved one’s debts. As a rule, those debts are paid from the deceased person’s estate.

That means any debts are paid with money from the assets of the deceased. Once those assets are gone, so are most unpaid debts.

Of course, every rule has its exceptions. In this case, the biggest danger is when a relative dies and you’re a joint cardholder — which is different than being an authorized user. A joint cardholder actually co-signed for the card — which means you’re on the hook for the bill.

This is common among parents who co-sign for their children or their elderly parents. It’s also something to watch out for if you’re divorced. Sometimes as part of a settlement, one ex agrees to pay off the joint credit card they got when still happily married. If that ex dies, the debt reverts to the other ex — the joint cardholder.

For more on how death affects debt, here’s a straightforward explanation from the FTC called Debts and Deceased Relatives.

I’ll end this answer by telling you, Chris, that I’m sorry for your loss but very pleased with how you used your grandmother’s money to pay off your credit card debt. As a parent myself, I always want whatever money I provide my children to have a long-lasting impact. I’m sure your grandmother would smile knowing how many more opportunities await you now that you’re debt-free.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched I’m glad you’re here.

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