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Credit Card Debts of Decedent

My mother passed away with $20,000 in credit card debt. As the Executor of her estate, am I liable for these bills?
January 20, 2016
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Question: My mother passed away with $20,000 in credit card debt.  As the Executor of her estate, am I liable for these bills?

Answer: As Executor, you have the responsibility of paying his debts from estate assets. Assets that are includible in the estate are ones that are in your father’s sole name without a joint holder or named beneficiary. You can only be held personally liable if you do not follow the rules.

In New York, creditors have a seven month creditor period to make claims against the estate.  The seven month period runs from the date of your appointment as Executor, not from the date of death. The purpose this period is to protect you as Executor.  Any claims that are filed in that period must be paid.  If the Executor distributes the assets to beneficiaries and cannot pay the bills of the estate then he is personally liable if the claim was filed within the seven month period.  The Executor is not personally liable if the claim is made after 7 months and the executor has no personal knowledge of the existence of a claim against the estate.  However, even if the claim was not presented within the seven month period, if the Executor had notice of the claim, he can still be held personally liable for the claim.  Of course, if the estate has more expenses than assets, you can try to negotiate the bills with creditors.  You could also ask the Court to declare the estate insolvent.  You have no obligation to use your own funds to pay the decedents bills as long as you follow the rules.

The executor has a duty to pay the decedent’s debts in the following order:

  1. Funeral expenses;
  2. Administration expenses (accountant’s fees, legal fees, appraisal fees and Surrogate’s Court fees);
  3. Income tax;
  4. Estate tax (if applicable);
  5. Real property taxes;
  6. Judgment Creditors including Medicaid;
  7. Secured Creditors (Mortgage, Home Equity Loan and Car Loans); and
  8. Unsecured Debts (credit cards, medical bills).

As you can see, paying the debts of a decedent is not always as simple as writing checks to all the creditors, especially if the decedent has limited funds. Make sure that you pay all of the debts properly so that you do not subject yourself to personal liability.  In addition, cancel all credit cards to avoid new and unauthorized charges. Prevent identity theft by sending a copy of the death certificate to three major credit reporting bureaus (TransUnion, Equifax and Experian).