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What Will Happen to My Loved One’s Finances After they Pass Away?

Although no one likes thinking about it, you may wonder what happens to your loved one's finances after they die.

No one likes to think about what will happen to their loved ones finances after they pass away, but it’s best to plan in advance to avoid frustration and financial loss during an already difficult time. Here’s what you need to know about what happens to someone's financial accounts, debts and more when they die.

What happens to financial accounts upon the account holder’s death?

This depends on whether or not there is a named beneficiary. An account with a named beneficiary is also known as a Payable On Death, or a POD, account.

If the account is a POD account, the beneficiary can collect the funds in the account when the account holder dies. There’s no need to drag things to court. Just show your photo ID and your relative’s death certificate to the financial institution, and they should assist you.

If there is no named beneficiary, the financial institution will release the funds in the account to the executor of the estate, who will distribute it according to the deceased’s will. If there is no will, the funds will be distributed according to state law.

It’s always a good idea to write up a living trust, establish a power of attorney and draft a medical directive before any of these are needed.

What happens to credit card debt after the card holder dies?

You probably won’t get stuck paying off your relative’s credit card debt; however, there are some exceptions. A family member might be accountable for such debts if:

∙ They have co-signed for deceased’s credit card.

∙ The debt is connected to a jointly owned property or a business.

∙ They live in one of nine community property states.

How are credit cards and other debts paid after the debtor’s death?

Here’s where probate comes in. Probate is the legal process of paying off the debts and distributing the assets of a deceased person. A probate court will determine exactly how this is done.

If the deceased left a will, the probate court will oversee and legalize the transfer of assets through an appointed executor.

If the deceased has left a living trust, the assets will automatically pass on to the beneficiaries without the need for an executor, or for lengthy court appearances and expensive attorney fees.

The beneficiaries of the deceased’s estate will not be allowed to take ownership of any assets if the deceased has outstanding debts. The creditor will need to submit a claim for the assets before a state-imposed deadline. If they have done so, and there is enough money or assets to cover the debt, it must be paid.

Thankfully, there are some assets that are off-limits to creditors, including life insurance policies, retirement accounts, and POD accounts.

What happens to your loved one's finances after they pass may be confusing and difficult to manage. Although there may be a lot to navigate, there are many resources that can help you through the process, such as Legal Zoom.

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  • The Great Giveback Official Rules

    1. Eligibility: No purchase or obligation necessary to participate and win. All participants must be 19 years of age or older at time of contest participation. Employees of Listerhill Credit Union are not eligible to register for the contest.

    2. How To Enter the Contest: All Listerhill members who have consumer loans in good standing, (subject to limitations below) are automatically entered. Anyone who takes out a new loan with Listerhill Credit Union, or refinances a loan from another lender with Listerhill Credit Union (subject to limitations below) will automatically be entered to win. Limit of one entry per loan.

    NO PURCHASE NECESSARY: To enter the contest without a loan, send a self-addressed, stamped envelope to: Listerhill Credit Union, P.O. Box 566, Sheffield, AL 35660, Attn: Great Giveback Contest Entry. Limit one entry per person. Written entries must be received no later than July 3, 2021.

    Listerhill Credit Union will not be responsible for incomplete, lost, late, misdirected or illegible entries or for failure to receive entries. All entries become property of Listerhill Credit Union and none will be returned. Any questions regarding the number of entries submitted shall be determined by Listerhill Credit Union in its sole discretion, and Listerhill Credit Union reserves the right to disqualify any entries by persons determined to be tampering with, violating, or abusing any aspect of the contest.

    3. Contest Entry Requirements: In the event the Credit Union, in its sole discretion, determines that any Entry contains content that does not comply with these Official Rules or does not otherwise comply with regulatory guidelines, Credit Union reserves the right to disqualify the entry.

    4. Determining the Winner: A Credit Union employee will select at random four (4) $500 winners (one per day July 12-15) and one Grand Prize Winner from all entries received on July 16, 2021. You do not have to be present to win.

    5. Prizes: $500 Cash Prize: the Credit Union will award four (4) members with $500 cash each. Grand Prize: The Credit Union will pay up to $25,000 toward your loan with Listerhill Credit Union, or combination of loans. No loan payments will be made to loans with any other lender. No cash equivalent provided, and the total prize amount may be less depending on the outstanding amount of loan balance(s) with Listerhill Credit Union. In no event will the prize awarded exceed the total amount of the winner’s outstanding balance of qualifying loans with Listerhill Credit Union. Federal, state and local taxes are the sole responsibility of the winner. IRS regulations require the Credit Union file a 1099 on behalf of the winner.

    A Credit Union employee will call the prize winners and the prize winners will be called up to five times during regular business hours at number provided on entry form and will leave no messages. Failure to reach winner during these calls may result in disqualification of winner, forfeiture of his or her interest in all prizes, and selection of a substitute winner drawn from the drum. Winner will be required to schedule a time, at least 48 hours in advance, to visit Listerhill Credit Union, located at 4790 2nd Street, Muscle Shoals AL, 35661 in person, during regular business hours within seven (7) days of being notified to claim prizes by providing proof of eligibility for prize won and completing and signing an affidavit of eligibility and a liability and publicity release. Failure of any Winner to timely contact the Credit Union, visit the above Credit Union office in person and sign and return any required affidavit and release, or to claim a prize or comply with any term or condition of these Official Rules, will result in drawing Winner's disqualification and the forfeiture of his or her interest in the prize. Winners may waive their right to receive prizes. Prizes are non-assignable and nontransferable. No substitutions allowed by winner.

    6. To be eligible to win, all loans must be in good standing (not more than 30 days past due at the time of drawing. Eligible loans are limited to auto loans (no indirect dealer loans), personal loans (no loans secured by real property, such as mortgages, 2nd mortgages, and Home Equity Lines of Credit) and recreation loans made to consumer borrowers (not business or commercial loans).

    6. Participation. By participating, entrants agree to be bound by these Official Rules and the decisions of the Contest. Except where prohibited, acceptance of any prize constitutes winner's consent to the publication of his or her name, biographical information and likeness in any media for any commercial or promotional purpose, without limitation the Internet, or further compensation. Prizes not won and claimed by eligible winners in accordance with these Official Rules will not be awarded and will remain the property of the Credit Union.