Are Authorized Users Responsible for Debt After Death?
Get clear answers on whether authorized credit card users are responsible for debt after the primary cardholder's death.
Credit card accounts often involve more than one person, leading to questions about financial responsibility, especially when a primary cardholder passes away. A common arrangement is having an authorized user on a credit card account. This setup frequently raises concerns about whether an authorized user becomes responsible for any outstanding debt if the primary cardholder dies.
Understanding Authorized User Status
An authorized user is an individual granted permission by a primary cardholder to make purchases using their credit card account. They are not a party to the original credit agreement with the issuer. Consequently, authorized users are not legally responsible for the debt incurred on the account.
This role differs significantly from a joint account holder or a co-signer. Joint account holders or co-signers apply for the credit account together and share equal legal responsibility for all charges and debt. An authorized user’s relationship with the credit issuer is without assuming liability for repayment.
Authorized User Liability for Debt
Authorized users are not personally responsible for the debt on a credit card account after the primary cardholder dies. The legal obligation for the debt rests solely with the primary cardholder. Therefore, the credit card company cannot pursue an authorized user for unpaid balances.
Upon the primary cardholder’s death, the authorized user’s permission to use the card ends immediately. Continuing to use the card after notification of the death can be considered fraudulent activity. An authorized user might be held responsible if they also held a different legal status on the account, such as being a co-signer or joint account holder.
Debt Resolution After Death
When a primary cardholder dies, their outstanding credit card debt does not disappear. The deceased individual’s estate becomes responsible for settling these financial obligations. The estate comprises all assets owned by the person at the time of their death.
An executor or administrator is tasked with identifying and gathering these assets. They use the estate’s funds to pay off all debts, including credit card balances, before any remaining assets are distributed to heirs or beneficiaries. If the estate lacks sufficient assets to cover all outstanding debts, the credit card company may consider the remaining balance uncollectible. This situation does not transfer the debt responsibility to the authorized user.
Credit Implications for Authorized Users
The closure of the account after the primary cardholder’s death can still have some implications for an authorized user’s credit report. The credit card account may have appeared on their credit report. When the account is closed, it will eventually show as a closed account on their report.
The closure of the account does not negatively impact the authorized user’s credit score due to unpaid debt. Indirect effects on a credit score can occur. For instance, the authorized user’s overall available credit might decrease. Additionally, if the deceased’s credit card was one of the authorized user’s oldest accounts, its closure could reduce the average age of their credit accounts. These potential changes are minor.