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Mom has credit card debt. Real estate is in beneficiary deed.
Is the property protected against her debt at her passing?
Thanks!

If the debt is at all securitized to the property, the debt will have to be settled to ever get the title to be clear. Like mortgages and HELOC are securitized debts. Usually - if I’m not mistaken- credit cards are unsecuritized. So it cannot be attached. But the CC can file a claim as a creditor of the Estate if probate is opened. Now whether or not it can get paid, depends on how your state deals with these type of debts in probate and if the Estate has assets. If you have a beneficiary deed on the house, then it was done so that the house as an asset bypass probate so no issue for pesky creditors.
HOWEVER
If your mom is still alive, I think you are getting a bit ahead of yourself on this though. Right now if she is seriously delinquent in paying her CCs, the CC issuer will close out her account, write it off (this part is important, more below) and if so inclined can file a lawsuit against her, go to court and if she doesn’t show up, they can get a judgment against her which can be placed on property she owns, IF YOUR STATE allows for this.

But even if the credit card company (it’s called the OC aka Original Creditor in debt collection speak) do not do this, they can actually do other things to muck up mom’s life. When OC writes off the debt, it can be for balance owed + any fees they can add on and all the interest they too can add on till the write off is processed by the OC via the issuance of a 1099 Cancellation of Debt. Can issue mom a 1099 for this whole amount not just the balance you have on her statements. OC will send a copy of the 1099 to the IRS and it will be considered income to mom and she will owe taxes to the IRS on it. It like other 1099 get sent Jan/Feb for the prior year’s taxes. Yeah…..horrors! If amounts she owes are large, this could be quite substantial 1099s coming to her for her 2024 or 2025 taxes from each OC. Fwiw Any creditor owed more than $600 can issue a 1099 if they write off the debt.

Why this is especially important is that it is the IRS who is owed taxes on this “phantom income”. IRS is a supercreditor and can attach any SSA payment she gets to pay off taxes owed. Other types of creditors do not have this ability but IRS and State taxing authorities do. It seems to vary as to the amount be taken by the IRS, seems to be 30%. But if your mom absolutely needs every penny in her income or is on LTC Medicaid which requires a specific copay to the NH for almost all her income, this will become a serious problem. Sometimes it can be dealt with by having a CPA do her taxes to establish insolvency, done by Form 982 and Section 1082 filings. Not a DiY, it’s CPA work. Otherwise she should expect a % of her income to go to the IRS. It’s not pretty.
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Reply to igloo572
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This is a question for a lawyer. I read beneficiaries are not responsible for the debt of the estate but in another thing I read, they may be. I think it may mean that if the house, that is turned over to them at death, has liens the person on that beneficiary deed will be responsible for that debt. Maybe even a Medicaid lien.
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Reply to JoAnn29
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