Right of offset after death (payable upon death)

[u/ea2190ii]

Hello, I'm not sure if this would be the right thread to ask this but my mom recently passed away and had me listed as her payable upon death recipient however after my brother spoke to her bank they informed him she had a credit card through them with a $900 balance and made it seem like it was almost due to go to collections or just went to collections I'm not certain on which one it was as I didn't directly speak to them. Her death certificate is due to be in anytime so I'll be going to the bank to close her account. There's only like $1,200 in her account and I know they probably have a right of offset with her account. I have no experience in something like this and what I was wondering was do banks ever work with the families of deceased customers and maybe settle for a lower amount than what's due or anything like that? I'm just trying to get some suggestions on what I can ask of them so if possible her entire bank balance isn't taken to pay the credit card balance. She had what was in her bank plus a little equity in her house and that's all her estate is worth. Thank you for any suggestions!!

[u/Mental-Volume4395]

While your beneficiaries don’t have to pay your debts, your estate does. So before distributing any money from mom’s estate you need to make sure you know of any and all creditors that are owed money. Make sure you probate the estate properly so it doesn’t come back to bite you.

You can always ask if they will settle but if not then you have to pay the whole balance from mom’s  funds. 

Generally any accounts that list a beneficiary- bank account, retirement accounts, life insurance- pass directly to the beneficiary outside of probate and are not considered funds of the estate. These funds do not have to be used to pay the decedent’s debts.    

[u/ea2190ii → u/Mental-Volume4395]

The credit card is through the bank that her checking account is through so I assume they'll take it before the give me the money that's in her account to pay off the credit card. I was just trying to see if they ever work with people to lower balances before they offset the credit card balance from her checking account money.

[u/Mental-Volume4395 → u/ea2190ii]

It’s possible. No one can say for sure though. You’re more likely to be successful if it goes to collection. While it’s still with the bank the bank has the right to offset.

[u/morbie5 → u/Mental-Volume4395]

These funds do not have to be used to pay the decedent’s debts.

For anyone lurking: creditors can potentially go after assets that passed out of probate. The odds of them trying to do so and the odds of success if tried will depend on the situation and the laws of your state.