- April 15, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Managing Credit Balances and Estate Planning
She considers that the credit card company allows carrying a balance as long as she makes a small payment monthly, essentially viewing it as a free loan until she reaches her senior age of 80, with a history of battling cancers.
Additionally, her estate is comprised of two aged Subarus, art, jewelry, and a trust providing approximately $3k per quarter, which is also shared among her two siblings. Further information regarding her estate is not readily available.
Considering her situation, the AI Legalese Decoder can be instrumental in deciphering the complex legal jargon often present in credit card agreements and estate planning documentation. This tool can assist in understanding the terms and conditions of her credit card agreement, providing insights into potential consequences of carrying a balance for an extended period.
Furthermore, the AI Legalese Decoder can help in comprehending the intricacies of trust agreements and estate planning, ensuring transparency and clarity in financial matters. By utilizing this tool, she can make informed decisions and seek appropriate legal advice to safeguard her assets and financial well-being.
Inquiring about others’ experiences with similar family situations can also provide valuable insights and guidance on potential outcomes. Consulting with financial advisors and estate planning professionals may offer tailored solutions and strategies to address her concerns and secure her financial future.
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****** just grabbed a
My FIl died $60,000 in debt to credit cards. His car was worth $3,000 and he had no real assets, and no surviving spouse. At the time of death we had the attorney draw up a letter explaining there was no estate and sent it to all the credit cards. They were out of luck. IF he had an estate with assets we’d have had to use that for the bills.
She hasn’t found some hack. She is literally paying interest every month on that debt so this is far from a free loan. It’s a 30% loan.
Lets do the math because I have a long compile going and I have time. Typically the minimum payment is 2% of the balance. So $600. Every year your grandmother will pay $7200 on that 30k debt. If she lives 5 more years that’s 36k she paid then. Then Amex gets to go after her estate for the additional 30k. So she will have paid Amex 66k for that 30k debt.
Not a great plan.
When she dies, her estate would be responsible for paying the CC debt.
If she only had, say, 20k of assets — when she dies her 20k will go to Amex, and the case is closed. So that would make sense financially; only paid 20k on a 30k+ loan.
However if she has more, let’s say 100k of assets — when she dies the 30k (plus all the unpaid interest) will go to Amex. That interest is just going to continuously accumulate and the debt will balloon. So it would be a much worse decision than just paying off that debt now.
However if she has no access to cash to pay off her debt then it’s not like she has a choice either way.
> Does anyone have experience with a family member doing this? What was the outcome?
Yup lol.
Before I had my own credit card or understood anything about this, my grandmother explained how this is basically what she did. I’m not even 100% sure she knew what she was doing, or maybe it was just her handwaving it away.
But yeah basically she just passed away and that was kind of the end of it. There was no estate to draw from because she had sold her house and was renting from her kids or something, I don’t know the exact details.
She just had a huge credit limit and was basically putting her everyday living expenses on it and making the minimum payment.
I found it very funny when I was older and realized what she was doing.
credit cards love when people just make minimum payments because that minimum is just the interest earned that month (plus like only 1% of the amount owed)
over time your grandma will have paid the amount owed multiple times but still owe money.
As long as she makes her minimum payments each month Amex won’t care. When she passes they will come for their money though. Regardless of what any will or inheritance says, banks get their say before anyone else.
I’m financially responsible but with no kids so no heirs. I’ve seriously wondered about doing this when I’m that age. If you don’t care about your estate after retirement, doesn’t it essentially become a zero sum game where you win if you spend your entire lifetime wealth + even go into debt at the last round.
mom died a few years back in MI, contacted attorney- they “advertise” that she has died, gives them 90 days to file a lien on estate. none did car lease company got nothing, CC got nothing. bottom line speak with an attorney and not Reddit lol.
Not a bad way to go, unless you’re an heir with a future interest in the estate.
Amex can close the account and she has to go pay under same terms so not much Amex can do
Plenty of people die w credit card debt that isn’t paid
It won’t pass to you. They will take it out of what she owns. They leant an 80 year old with cancer money they know the risks.
It’s not a “free loan”. She is paying the full interest every month (that’s what the minimum payment is), and that too at a terrible rate. The average credit card APR is ~23%. If she does this for long enough she will have paid back the bank more than she borrowed to begin with, and will still owe the entire principal from her estate (so bye bye jewelry and cars and everything else). The only one getting free money here is AmEx.
Sounds like grandma spent some money. Maybe it was for essentials and maybe it was spent on fun things for her, we really don’t know.
When she passes the estate will have to deal with AMEX. Try to negotiate then or more likely if the estate has $30K of value AMEX will demand it all. They have not reason to accept less at that point. Grandma won’t have to deal with it either way. Her heirs will get what’s theirs minus the $30K plus interest grandma spent while she was alive.
So if she pays it now or the estate pays it later the heirs won’t see this $30K.
When my mom passed, Amex was first on the horn. They discovered my brother’s phone number, next-of-kin, and blasted him multiple times a week. Eventually it was forwarded to me, as administrator. There’s a 3 month reprieve following last public notice. They sent an amended balance to settle the estate, wrote back debtor priorities, and if they would accept a concession to her $2k balance, then it’d be paid once it gets settled.
This was 2 months ago; I don’t believe concessionary balance was in their interest ($2k -> $250). For $30k they’ll be vultures. Other credit cards ranging from $300 to $8k sold it off to debt collectors all of which were written off as uncollectable.
As long as she makes contractual minimum payment it’ll be okay… but that’s a set amount not just some “token”.
She needs an estate lawyer. She should make sure her assets are protected from Medicaid and should ask a lawyer this question. She can probably charge the fee to Amex
Nobody is entitled to an estate and what she’s doing is legal.
Relinquish her of all her estate and properties before she dies. If there’s no money in her name, they can’t take it.
Here you go: https://www.consumerfinance.gov/ask-cfpb/does-a-persons-debt-go-away-when-they-die-en-1463/#:~:text=If%20there's%20no%20money%20in,you%20fall%20within%20another%20exception.
Talk to an estate/trust lawyer. However from ehat I understand cc debt is incredibly difficult to recover in peobabte court.
Grandma may have it.
Lots of confusion here.
IN MY EXPERIENCE, IN MY STATE AS AN EXECUTOR OF AN ESTATE WITH NO WILL.
After probate is opened and paperwork is filed, one of the requirements is to put out a 30 day notice to creditors to file a claim against the estate. If they wait until day 35, the estate can legally deny their claim and will not have to pay the debt.
The estate is not under obligation to stay solvent. If there’s no money, there’s no money and the creditors have to eat their losses.
Now what constitutes as what is part of the estate and what is not, that’s another story. Nobody looks that closely at grandma’s dining room furniture or her costume jewelry.
And someone mentioned that the interest keeps on getting added after she dies, creating a bigger financial burden. This is also incorrect and stupid easy to negotiate out of. Accounts are consider closed at the date of death. Get a better probate attorney.
In this instance, Grandma is correct. It’s not going to be a problem if she dies with a 20k Amex bill.
She’s 80 with cancer and sounds like she’s broke. Why on earth would she care about bankruptcy or credit scores or dying without debt?
We have aging parents who now have Medical issues so we are needing to try and get a handle on their finances to keep the estate and not have Medicaid or creditors take it. Most elderly just give up on finances it is just too taxing to deal with especially with how medical places just continually bill them with mo explanation.
All any creditor that you didn’t cosign for can do is for a claim against the estate. Worse case for you is no inherentance left.
(Youtuber with over hyped voice) “Today I tell you the hack that credit card companies WANT you to know about!”
They’ll definitely go after the estate. But they’ll probably consider the Subarus valueless unless they’re special. If the art is a Van Gogh they’ll take it. If it’s a motel paintings, not so much. The big draw will be attempting to get the trust, but I’m pretty sure they’ll be stonewalled, first because it’s a trust and second because its jointly owned. They can’t force liquidation. What they probably can do is garnish those juicy quarterlies in full.
There are some whackadoodle comments here. Definitely don’t tell her to file for bankruptcy. The trust that is shared by her siblings would be what concerns me-it may be protected so that it couldn’t be seized by Amex, but I would get a lawyer to confirm that.
Honestly I think everyone in the US does this. Debt is not inherited here. Worst case scenario you get less an inheritance. The laws may be different in your country.
Get a consultation from a bankruptcy lawyer, most are free.
If she qualifies she could at least stop paying. Maybe she has more debt than she’s admitting.
It’s worth a consult.
Your grandma is onto something, of course she’s not worried about paying debt at 80 LOL. Be happy for her, maybe she can charge a little more before it’s too late. What’s your concern here? Why do you care about American Express
If she’s going to die before it would be payed off then don’t pay it, the debt dies with her.
No one can give you a straight answer without all the info, but if they could, it’d be a pretty lousy trust
AmEx will need to get paid before the estate is distributed.
And others have pointed out, she is paying something like 30% for that loan.
Not wise IMHO.
I’d go chat with an estate attorney with her to figure out a loophole so she can stop paying sooner than death.
In my mind Grandmother should transfer ownership of anything to someone else and see if she can get off the trust and have that money given to her in cash from whomever she transfers it to, then stop payments.
I’d be surprised if there isn’t some legal protection for AE to flag that allows them to look at items/cash she has transferred to others within a reasonable (a year? 2 years?) amount of time as if she was hiding assets. So she might have to pay it for another year or two after offloading her assets and then trusting someone will give her trust money each month before telling AE to eat it and ignoring their calls and mail
If she is 80, and she doesn’t have any assets, then she is right these bills die with her. If she is only getting SS, they can’t sue her either. The trust is too small, I don’t think they can go after it either.
That is couch change for AMEX… a death certificate and letter of explanation of no significant estate – they will write it down. Not worth the hassle of making a claim with other creditors to divide the scraps.
She is paying interest on the debt each month and then when she dies AMEX will collect whatever they can from the estate. It isn’t a free loan.
Honestly why is she paying it at all. Someone I know in their 60s was able to rack up $250k in CC debt. She opened every credit card she could and maxed them all out over several years (COVID years). She just put every expense on a card while her and her family were out of work in Los Angeles and stuck to making the minimum payments. Once she relocated and got settled with a new job she cut up all the cards. For about 9 months she ignored all the phone calls, emails and letters until she got served one day at work. Filling bankruptcy with a lawyer cost her under 2k and no one ever came after her for anything. Her only asset was a car which she “sold” to her kids and nothing ever came out of it. The 250k debt was gone just like that. The only real effect was her credit score but she had no use for it at that point. Funny thing is less than a year after filling bankruptcy she started getting more CC offers in the mail. Opened a few and has a mid 600 credit score last I heard.
She could just file for bankruptcy and be done with it. Her credit score would take a hit but at her age, who cares.
It’s not a free loan if she’s paying them for it
Once someone dies, their credit card debt dies. No one can make you or any relatives pay it.
The estate can negotiate say 50 cents on the dollar.
If she doesn’t have substantial assets but owns a home, then she can file for bankruptcy right now and keep her home.
Can’t she file for bankruptcy? Does that work? Legit asking