cc debt upon death - joint account

[Waltermelon]

What is the name of your state? OH

My father passed away recently leaving a financial mess for me to clean up. I have gathered what information I can (he left my mother in the dark about all financial matters).
I pulled his credit report and there are 2 CC charge offs - one indicates a joint account ($22,000) and the other indicates an individual acount ($4,400) with my mother listed as an authorized user. In 9/04 a judgement was made against him (them?) in court for the larger debt. I do not have a copy of the judgement, but I supppose I will need to get it.

The estate has no value to it - they only own a junk car and personal belongings. The only source of income for mom is SS. However, a life insurance policy is going to net her about $3,000 after funeral expenses. Additionally, she has been receiving money from individuals to help her financially totalling approx $5,000. To make matters worse on the money she has been receiving, I received advice to open up a "memorial fund" account in dad's name at the bank. I can't get the bank to open the account - they want all kinds of estate information even though there is no estate to be had. There are checks sitting around that cannot be cashed (yes, I know that's a beast of a whole other nature). I know that they cannot touch her SS money, but can the CA come swooping in to take the only cash she has had in years? Is the life insurance considered fair game to them too because she was on a joint account? Would it be best to contact a lawyer for this?

 

[Debt Guy]

First, I am sorry for your loss the and mess to contend with.

Q. I pulled his credit report and there are 2 CC charge offs - one indicates a joint account ($22,000) and the other indicates an individual acount ($4,400) with my mother listed as an authorized user. In 9/04 a judgement was made against him (them?) in court for the larger debt. I do not have a copy of the judgement, but I supppose I will need to get it.

A. Pull Mom's credit report and see what it says. Go down to the courthouse and ask to see the judgment file. Read it and it will tell you who the defendants were in the action.

Q. The estate has no value to it - they only own a junk car and personal belongings. The only source of income for mom is SS. However, a life insurance policy is going to net her about $3,000 after funeral expenses.

A. Insurance proceeds are not a part of his estate. That is Mom's money. However, if someone has a judgment against Mom, it is possible they can garnish (wipe out) any bank account with her name on it.

Q. Additionally, she has been receiving money from individuals to help her financially totalling approx $5,000. To make matters worse on the money she has been receiving, I received advice to open up a "memorial fund" account in dad's name at the bank. I can't get the bank to open the account - they want all kinds of estate information even though there is no estate to be had. There are checks sitting around that cannot be cashed (yes, I know that's a beast of a whole other nature).

A. I'm afraid you are going to have to contact each donor, explain the problem with the bank, and ask them to exchange checks with you. I recommend the new checks be made payable to Mom.

A. I know that they cannot touch her SS money, but can the CA come swooping in to take the only cash she has had in years?

Q. Again, if they have a judgment, they can wipe out the bank account. Strictly speaking, the SS money in her account is exempt but it is a real pain trying to get the money back if it has been grabbed.

Q. Is the life insurance considered fair game to them too because she was on a joint account?

A. Only as previously described.

Q. Would it be best to contact a lawyer for this?

A. Not sure you need to incur that expense yet. Find out if there is a judgment against Mom and we can develop a plan from there.

 

[BlondiePB]

Due to the fact that there was a death notice/ad in the newspaper that stated donations could be made to a memorial fund of the deceased, asking all the donors to change their checks and have them re-issued to the surviving spouse can result in the spouse and even the poster (see link) looking at some fraud. The donations now belong to the estate of the deceased.

If the spouse had the life insurance policy go directly to her, then the donations can be used to pay for the funeral with that money set up properly as advised in the other thread (paying final expenses according to probate statutes).

I agree about the bank account, and checking on the judgement, etc. The life insurance proceeds must go into an account owned solely by the mother, even if she has to open a new account.

https://forum.freeadvice.com/showthread.php?t=275757

 

[Waltermelon]

Thank you both for your time on this matter.
How do you figure that the donations belong to the estate? Established Memorial Funds are not a part of an estate. The monies were not given to the decedent or the estate, did not exist upon death and are earmarked for a particular cause. In this case, the intent of the money is to enable the surviving spouse to adjust to a change in lifestyle, to pay for other misc expenses such as repairing/replacing the junk car so that she has transportation, and to cover moving expenses. Those who contributed were informed and understand that. Unfortunately, bad advice was taken from an apparant ignoramus to state a memorial fund in the death notice and I will take the blame on that one.

There is no intent whatsoever to commit fraud here. If what it takes is to return the checks with a letter explaining that the checks cannot be cashed without a near act of God (which is entirely true), and let them know that they can make a donation payable to the company for which a certain expense is incurred, then so be it.

I regards to the life insurance policy, I will open up an account in mom's name to keep the funds separate. When the account is opened, is it possible that it could be flagged from the open date and the money pretty much forfeited right then and there? Am I correct in assuming she is under no obligation to report that money to the CA and that they will know about it soon enough because of his passing?

 

[Debt Guy]

Blondie and I don't see this quite eye to eye.

An allegation of fraud is always possible, but I think it is highly unlikely -- we are talking about relatively small amounts of money and a very explainable situation.

I would just go ahead and try to trade checks with the donors. Most will understand. Those who don't will just keep their old check and not send a new one. In which case, you have not lost anything that you don't already have.


Q. I regards to the life insurance policy, I will open up an account in mom's name to keep the funds separate. When the account is opened, is it possible that it could be flagged from the open date and the money pretty much forfeited right then and there?

A. No. Life insurance proceeds are not a part of the estate.

Q. Am I correct in assuming she is under no obligation to report that money to the CA and that they will know about it soon enough because of his passing?

A. She is under no obligation to tell them anything. They will ask but they have no legal right to the information and your mom would be wise to not answer questions.

Re-read my original post. Mom's bank accounts are subject to garnishment. But, the creditor must first sue and then win a judgment. Until then, the bank accounts are safe. Do not ignore any summons for a lawsuit.

 

[BlondiePB]

Blondie and I don't see this quite eye to eye.

We're just going to have to agree to disagree, Debt Guy. The poster publicly solicitated funds; therefore, the funds received fall under laws that govern solicitation, which includes donations.

It's really no big deal to just open an estate account, pay for the funeral with the memorial fund money, then use the insurance money for any difference. The mother will still have all the rest of insurance money left over to pay for the car, etc.

We have Debt Guy who deals with debts & collections vs Blondie who deals with estates and fiduciary matters.