What Happens to an Authorized User When the Account Holder Dies?

An authorized user on a financial account, such as a credit card or bank account, is an individual granted permission to make transactions by the primary account holder. This arrangement is often established to allow trusted individuals, like family members, to access funds or use a credit line for convenience. While an authorized user can make purchases or withdrawals, their relationship to the account differs significantly from that of the primary account holder, particularly concerning ownership and liability.

Understanding Authorized User and Joint Account Holder Roles

An authorized user has permission to make purchases or withdraw funds from an account but does not possess legal ownership of the account or its assets. They can use a credit card linked to the primary account holder’s credit line or access funds in a bank account. However, they are not a party to the underlying contract with the financial institution and are not responsible for account payments.

This differs from a joint account holder, who shares equal ownership and responsibility for the account. Joint account holders have full access to funds or credit and are equally liable for any debts.

Similarly, a co-signer assumes legal responsibility for the debt alongside the primary borrower. The key distinction is that an authorized user lacks the legal ownership and financial liability that joint account holders or co-signers possess.

Immediate Account Access After Death

Upon notification of a primary account holder’s death, financial institutions freeze or close the deceased’s accounts. This protects assets and facilitates estate settlement. Any access privileges granted to an authorized user are immediately terminated.

For credit cards, the authorized user’s card becomes invalid and cannot be used for new purchases or cash advances. For bank accounts, an authorized user can no longer make withdrawals or access online banking services. The ability of an authorized user to transact ceases because the authorization provided by the primary account holder is no longer active.

Authorized User Liability for Debt

A common concern for authorized users is whether they become responsible for the primary account holder’s outstanding debts after death. An authorized user is generally not legally liable for the deceased primary account holder’s debts. The original credit agreement is between the financial institution and the primary account holder, not the authorized user.

Any outstanding balance on a credit card or loan becomes the responsibility of the deceased’s estate. The estate’s assets satisfy these obligations before any remaining assets are distributed to beneficiaries.

However, if an authorized user makes new charges on a credit card after becoming aware of the primary account holder’s death, they may be personally responsible for those specific post-death charges.

Account Resolution by the Estate

The deceased’s financial accounts are handled as part of their estate, often through probate. The executor or personal representative of the estate notifies financial institutions of the account holder’s death, providing documentation like a death certificate and proof of authority. Once notified, the financial institution works with the executor to manage the account.

For accounts with a positive balance, such as checking or savings accounts, funds transfer to the estate for distribution according to the deceased’s will or state law. For accounts with outstanding debts, the executor arranges for liabilities to be settled from the estate’s assets. The account is then formally closed as part of the estate administration process.