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Richard, Attorney
Category: Estate Law
Satisfied Customers: 55610
Experience:  29 years of experience practicing law, including tax and estate planning.
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My wife just died last year. She had a credit card bill of

Customer Question

My wife just died last year. She had a credit card bill of $5400 and department store account of about $200.Since there is no estate except the property we owned in both name, is it better to settle since I am not required to pay any debt of the estate. Could there be any judgments or liens that would prevent me from selling the property in the future. And if I do settle some of the debt, could the creditor report the unsettled portion of the debt as income to the IRS and cause me a tax liability
Submitted: 1 year ago.
Category: Estate Law
Expert:  Richard replied 1 year ago.

Hi there. My name is ***** ***** I look forward to helping you.

Some of this depends upon the assets that you owned in both your names. Certain of these co-owned assets pass outside probate and thus are not subject to creditor claims. These include the following: i) joint brokerage and bank accounts which vest automatically in the surviving owner upon the death of one owner; ii) real property held as joint tenants or tenants by the entirety, which also vest automatically in the surviving owner upon the death of one owner; and iii) assets with designated beneficiaries other than the estate such as life insurance and retirement accounts. If your assets you owned with your wife fall within the foregoing, you need not worry because you have no risk of any liens.

If there are other assets which will require your wife's share of the marital property to go through probate, then those could be at risk to your wife's creditors and in that event you would be wise to settle. BUT, even then, I would not settle right out of the box...rather, I would write them, tell them your wife died, there were no available assets to pay this debt, and that they will need to write the debt off. In order for any creditor to put a lien on any assets, the creditor will actually have to pursue the claim to a judgment first. And, in your fact situation, they typically do not go to that expense. If one or more of them do, you will get notice of any suit, and you can settle it at that point.

Finally, let me tell you how sorry I am for the loss of your wife. I'm sure this is a difficult time for you and I will certainly keep you in my prayers!

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Customer: replied 1 year ago.
For my own information. If settlement was made of the debt ,could the creditor declare the unsettled portion of the debt income
and report that to the IRS since I took on the responsibility to pay part of the debt ?.
Expert:  Richard replied 1 year ago.

Thanks for following up. The creditor could, but it would not be issued to you. Rather, it would be issued to your wife and you would not have any liability for this. :)