Credit Card Debt After Death–Are My Loved Ones Responsible? It Depends

These days when so many people accumulate high credit card debut, it raises concerns about what happens to that debt if you die before it gets paid off.

When you are the sole account holder of the credit card, the state probate laws will regard the debt as part of your estate and it will be discharged out of the estate accordingly. If the value of the estate is not enough to cover the balance due, it is the card companies who must write off the remainder of the debt.

Spouses responsible in community property states

However, in community property states, married couples are presumed by law to own all properties and owe all debts equally. It matters not whether one or both spouses signed the contract. Hence, your spouse has the responsibility to pay the unsettled credit card debt after your death.

Another exception is a state with “necessities law”. Once you use a credit card to buy food, medicine, utilities and other types of necessities, this portion of the debt is considered joint, regardless of the account designation. So the surviving spouse is responsible for paying it. In practice though, card companies very rarely invoke the “necessities law” to recover the debts owed.

Naturally, when there is a co-signer to your credit card, such as a spouse or child, they are liable for the debt should you pass away. As a joint account holder of the card, they have agreed to be fully responsible on any card issue as a partner.

Accumulating credit card debt means you’re paying huge interest rates on that debt. If you die in California, it’s your spouse who’s going to be responsible for paying off that debt.

Do you have questions about your Will or Living Trust? Contact California Document Preparers at one of our three Bay Area locations.