Maryland Estate Planning Information: What Happens to Credit Card Debt When I Die?

Many clients ask me a variation of the following questions. What will happen to my credit card debt when I die? Will my credit card debt be passed on to my children? Will my spouse have to pay for my credit card debt?

There are two factors that will determine who, if anyone, is responsible for your credit card debt after you die: whose name–or names–are on the account and where you live.


Name on the Account

If the card is in your name only, your estate is responsible for the debt. As the estate goes through probate, the executor (or “personal representative” as they are called in Maryland) will make a determination of the assets and debts of the estate and pay off debts in the order that state law requires. If assets remain after debts are paid, the assets will be distributed to beneficiaries according to your will or, if you don’t have a will, according to state law.

Remember that not all assets go through probate; things like insurance proceeds, IRAs, and 401(k)s usually go to beneficiaries outside of probate. Accordingly, beneficiaries receive those assets regardless of debt, and the personal representative of an estate cannot use those assets to pay off credit card debt.

If you share your credit card account with someone else, that person could be responsible for the debt. If there is another person listed on the account but only as an authorized user, they will not be responsible for the debt.

If your estate is responsible for the debt and there isn’t enough money in your estate to cover the bill, the debt will be eliminated and the credit card company will receive no additional funds. Your heirs are not responsible for the debt.


Community Property States

In community property states assets, and sometimes debts, accumulated through a marriage are considered marital/joint property. This could leave your spouse responsible for your debt. Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington are community property states. Laws in each state vary thus it is important that you speak with an attorney in that state.

For a free, confidential conversation to discuss these and other estate planning matters, or to create your own estate plan, contact Maryland estate planning attorney Stephen J. Reichert at 410-299-4959, sreichert@reichertlegal.com or by clicking here.

Day, evening and weekend appointments are available in office or at your residence. Mr. Reichert personally serves clients throughout most of Maryland.