Credit card balances after death

WillyWonga

Hi all, am after a bit of advice on credit cards after death.

If a person dies and have credit cards in their name solely how does this go against the surviving member - ie my dad.

My mum had 2 cards in her name only with approx. £7k on each. Trying to sort out the finances today and there is no life insurance or any other policies to pay out. There were no savings, no assets apart from the house which has £20k o/standing on a mortgage with the house worth about £180k. The house was transferred to tenants in common a few years back.

My mum took out the cards in her name only at the time and my dad on one of them was an additional card holder. Looking through articles on the internet it mentions the companies claiming the balance can put a claim against the estate but when there are no savings or payouts and my dad still needs to live there I am after to info to any experiences what happens next?

Many thanks in advance.

Tixy

As the house was held as tenants in common then your mothers share of the property becomes part of her estate after death.

And assuming her estate is sufficient in value her credit cards debts would need to be repaid from her estate.
The remainder of her estate would then pass to either the beneficiaries in her will or if no will then the intestacy laws would appy as to who was beneficiary.

In terms of repaying the credit card debts and assuming that Dad is the beneficiary of the will then perhaps this could be achieved by Dad arranging a further mortgage / loan / repayment plan with the creditors. If he cannot raise further funds or reach a repayment the card companies are happy with then potentially the house could need to be sold to repay the debts (perhaps with Dad they buying a cheaper property?)

If they had been joint tenants the house would have passed to Dad and not become part of her estate, and so there would have been no estate and the debts wouldn't have needed to be repaid.

This thread and section of the forum may be useful -
What to do when a partner/spouse dies. and Deaths, Funerals & Probate

WillyWonga

Many thanks for the info.

They decided to convert to tenants in common if one of them had to go into a care home. The tenancy in common passes my mum's share onto her 3 sons (1 of which is me) and this is written in her will. Its ironic that the original joint tenants protects credit card bill and tenants in common protects care home bills.

bigadaj

WillyWonga wrote: »

Many thanks for the info.

They decided to convert to tenants in common if one of them had to go into a care home. The tenancy in common passes my mum's share onto her 3 sons (1 of which is me) and this is written in her will. Its ironic that the original joint tenants protects credit card bill and tenants in common protects care home bills.

Not really ironic, a natural consequence of a decision. It's frequently the case that a decision has benefits and drawbacks and this is such a case.

The problem is that of one of them did have to go I to a care home there is still the value of half of the house to be claimed against in fees. It obviously depends on the relative balance between fee and house value but it might not even be beneficial in that case.

chattychappy

Tixy wrote: »

If they had been joint tenants the house would have passed to Dad and not become part of her estate, and so there would have been no estate and the debts wouldn't have needed to be repaid.

True it would not go into the estate (pass by surviorship), but there is now the possibility of a court order requiring a deficit in the estate to be made up in these circumstances. Doubt whether it's used much in the case of CC debts. (And, of course, not relevant here anyway.)

WillyWonga

Thanks all for your info.

Its a case now for the credit card companies. Looking at the finances my dad now only has the basic state pension. There were no insurance policies, life cover, savings etc. Nothing of any value. Paying the standard bills including the mortgage will leave him with not much left a month.

Estate wise there is only the house, which my dad has a 50% share and I can't see a court forcing a sale.

StuC75

So now the mothers 50% share is passing to the 3 sons - will they be contributing to the mortgage that is remaining??

wouldn't this then help your father out financially? or would it be better for him to then sell up the house, pay out the sons and then move in with one of them - giving your father a nice amount of money in the bank, no money worries and a place to stay?

Most of the concern being voiced here seems to be regarding equity \ inheritance preservation rather than providing for what your Dad would need...

lisyloo

The problem is that of one of them did have to go I to a care home there is still the value of half of the house to be claimed against in fees.

In my neck of then woods if there is someone over 65 living in the house then it cannot be used for care home fee assesements.
Not sure though whether these rules are local.

lisyloo

Its ironic that the original joint tenants protects credit card bill and tenants in common protects care home bills.

First can I say sorry for your loss.

The point you yourself brought up above does need some moral comment.
Many people would understand and agree that it moral to protect your father's assets from your mothers care home fees and vice versa.
But is trying to get extra money for the beneficiaries from not paying her own debt particularly moral?

Mojisola

lisyloo wrote: »

In my neck of then woods if there is someone over 65 living in the house then it cannot be used for care home fee assesements.

Not sure though whether these rules are local.

The value of the family home is not taken into account if a spouse or civil partner or someone you live with as a partner also lives in the house. It's also disregarded if someone else over 60 lives there or if someone under 60 who is 'incapacitated' lives there.

Changing the house ownership to tenants in common only protects part of the capital if it's the surviving spouse who needs residential care.

Mojisola

WillyWonga wrote: »

Its a case now for the credit card companies. Looking at the finances my dad now only has the basic state pension.

There were no insurance policies, life cover, savings etc. Nothing of any value. Paying the standard bills including the mortgage will leave him with not much left a month.

Estate wise there is only the house, which my dad has a 50% share and I can't see a court forcing a sale.

If he only has a basic pension, he should be able to claim Pension Credit.

Whoever is executor of your Mum's estate needs to contact the CC companies. It's the executor's responsibilities to pay your mother's debts.