What do I do with my elder parents credit card debts? Do you pay their credit card bills? My father just passed away and my mother has been in the hospital for 4 months. I am not yet her guardian and am waiting on that as I am very timid of the whole process and my lawyer advised me to wait till I was ready. Since I normally paid my mothers bills online with her money I have just kept up that process so everything is being paid. She will need nursing home care and won't have the money for that and probably won't qualify for medicaid for awhile either. Her income is slightly higher than the medicaid threshold so I have zero clue how that will all work as I sure as heck am not paying for it. So I guess my question is, when your elder parent was needing extensive medical care were you keeping up with their CC bills too? I feel like just paying the essentials like house, utilities, insurance are important but no where have a I read what you all did with their debts? When you become a guardian do you have to keep up payments on the CC debts too?
Unless you are a co-signor on the credit cards (different from an authorized user), you are not responsible for her cc debts - but her estate will be.
No 2 credit card companies treat the situation the same. 1 cc company said fine, then shut down the account and sold it to a debt collector--- you know how fun those calls are.
Another cc company was very nice, stopped all fees, and reduced the interest and let us slowly pay off the card
Also you need to look at - does Mom still need to have credit cards? Don't shut them all down, if she may need to them to pay for prescriptions, glasses, dentists or something else not covered by medicare or insurance.
If she owns any property (including a cemetery plot), Medicaid will look for those assets to help cover nursing costs.
It gets so complex it really is best to gather all of her financial information together assets and debts, and consult an elder law attorney.
For Medicaid, financially you have to qualify for both income & assets. For an individuals assets, you spend down (like private aying for care) till you get to 2k in nonexempt assets. But for income, it has to be under whatever your state has set as maximum income monthly. Like when my 90+ yr old mom applied her states monthly income max was $2,064.00. Now my mom was ok as her income was $ 1,900. BUT for younger folks -like baby boomers - some get $ 3k a mo from SS alone. They are way way over the income max for Medicaid. But still don't make enough income to pay a 10 -15k a mo NH bill. If they have already spent down and private paid for care, it's a financial crisis.
For this situation Miller solves the problem.
Say $ 3,100 SS plus $ 900 annuity each mo. 4k & $ 1,936 over the limit. But if the income qualifies then the Miller becomes the payee for the 4k & Viola! your now eligible for Medicaid! NH gets all the Miller $ less a smallish personal needs allowance.
Hopefully you have a hefty 6 figure nest egg so never need Medicaid. But for those who find themselves with income to high for Medicaid but too low to private pay for care, a Miller Trust is a godsend.
It's a lengthy, nail biting experience, but with a GOOD elder care attorney, you're guided through every step, then you're done!
Attorney was a total of $12,000, but we saved that much in just over a months worth of nursing facility care!
the question is the legality of who owes. the child does not owe for the parents. if the parent is still alive and has the funds to repay - then yes, continue paying off the debts.
But if the companies are dunning the child of the parent because the parent cannot pay - this is not legal.
You actually admit this in your answer: "Your parent(s) 'borrowed' money with the agreement to repay the debt. They have a legal and moral obligation to hold up their end of the bargain."
THEY have a legal and moral obligation. THEY. Not YOU.
YOU have a choice. Not an obligation.
NO!! Not unless you're also on the cards! He even stated that the credit card companies cannot take your inheritance either! This is why you need to use an attorney. If you can't afford one, at least contact Legal Aid to ask questions.
Mind you, I had 2 lawyers tell me I had to keep paying my dad's mortgage even though not allowed to do anything with his mobile home until after probate.
At Probate, the judge asked me why I kept paying the mortgage. I said I was told I had to. She said there was no money (funds) in dad's estate - and I didn't have to keep paying the mortgage. She also said "I gifted the money to pay the mortgage."
8 years earlier, the bank had put me on all dad's accounts so I would be able to access funds for his care. The judge said the money was legally all mine - and I owed nothing to his creditors. (the only creditor was for the mortgage - I had been advised to do a mortgage instead of outright purchase for the home.)
The transfer on death (TOD) designation lets beneficiaries receive assets at the time of the person's death without going through probate
Elder Care Attorney should be able to help with this. I recommend you continue to pay, at least the minimum, to keep these vultures off your doorstep. Setting up a PROPER trust with an APPROPRIATE trustee should NOT be seen as the wrong thing to do. IF there are assets and IF mom or dad applies for Medicaid, ALL assets are considered and Medicaid can suck those dry. There should be more concern about this than appointing an untrustworthy trustee, which goes against the very name "trustee". Dontask says "trust means you're gifting your money and assets to someone you a point as a trustee" - that is NOT what a trust is/or should be. We set up a trust for our mother - it is STILL her assests and it is for HER benefit while she is living. We three children are the "trustees" and we use it to pay for HER. We would be the beneficiaries of anything left after her demise, HOWEVER if the trustee is chosen wisely, no money should be taken or spent on the trustee's behalf UNLESS that person can prove the money was originally spent on behalf of the principal.
So, beware just ignoring debt thinking it will go away... have this handled with the help of an Elder Care attorney. Certainly YOU are not obligated to pay anyone else's debt, so NO, do not use your own assets to pay off anyone's debt!
Someone on here mentioned something about a Miller trust. I don't trust trusts for the simple reason there's no guarantee the person will use the money on you. I trust means you're gifting your money and assets to someone you a point as a trustee. Therefore, they can do what they want with what's now their money and assets since it now belongs to them. No thanks! Another downfall of a trust is that you have to keep paying to keep the trust open from what I was told. Nope, not for me. My goal is to never run out of money, not drain myself dry and land back in poverty.
The alternative
Anyone on federal benefits can start their own able account in any state in the US. It was once restricted to just the state you live in, but now it's open to any state you choose to start one in. However, you can only have one able account. You can have a very high savings amount but there's only one problem. Medicaid can go after that when you die as a compensation. What you may want to do to make sure your last wishes are honored is set up a preneed with the funeral home and maybe even start a POD account or pay on a funeral preneed policy monthly. Make sure you keep copies of your preneed papers in a safe place or best yet, multiple safe places. Don't ever lapse on your payments.
If your state has a TOD for your home or business or anything that a TOD would cover, definitely open such an account now while you can and the nursing home won't be able to grab it. When my bio dad was in a nursing home, they weren't able to touch his home because it was in a TOD account.
If mother simply defaults on credit card debt, the companies may issue her a 1099-C, cancellation of debt. That is viewed as income by the IRS, has to be reported and may have taxes due on it, which makes this not a Do-It-Yourself project. It can affect Medicaid application, participation in income-based programs like meals on wheels, etc. Your lawyer should be one that is well-versed in elder law and MEDICAID. Don't just assume that they are - ask. If your father was a veteran, your mother may qualify for programs through the VA, again you won't know unless you ask. There are hospital social workers that can help you begin the process of deciding what the appropriate placement will be (not coming home to live with YOU), and how to access programs to help you make it happen. Take care of your own oxygen first in the process - otherwise you will never be able to help anyone else. Breathe.
Once those cards went delinquent my phone blew up. l had called his creditors from my cell phone so that's the number they had as a contact number. I was patient and told each of them again the situation but the calls became incessant. I finally told each and every one of them not to call me ever again. The calls slowed down but didn't stop. Once my dad died I called them all again to tell them he was dead and they all asked about my dad's "estate". I had to laugh at that. A couple of the creditors asked for a copy of the death certificate which I never sent and that was the end of it.
Don't take on your parents debts. Their creditors will try to get you to but don't ever do it. You're not legally obligated to and if you have to have any interaction with their creditors make sure you tell them to never call you because once they have your phone number that's a new contact number for them. Your dad has died and they can't get to your mom so they'll try to contact you repeatedly. Block their numbers from your phone.
Hopefully others will have answers to your main question.