Q: Can a Credit Union drain account to pay for credit card immediately after death?

Question

I am a joint owner on my mother's checking account. After her death the credit union automatically transferred all of the money from the checking account to pay off her credit card (also from credit union). The credit card was in her name only and I am not a co-signer on the credit card.  I now have no way to pay for her funeral, medical bills, lot fee for her mobile home, utility bills, etc. I was under the assumption that creditors would have to wait for probate and get in line. The credit union took the money from her checking account 5 days after her passing. We don't even have her death certificate yet.

James L. Arrasmith · Answer

I'm so sorry for your loss. This is a difficult and stressful situation to navigate while grieving. 
 
From a legal perspective, the credit union's actions seem questionable. Generally, when someone passes away, their estate goes through the probate process to settle debts and distribute assets according to the person's will or state law if there was no will. Creditors typically need to wait for this process. 
 
However, credit unions sometimes include a "right of offset" clause in their agreements. This allows them to withdraw funds from a deposit account to cover an outstanding balance on a credit card or loan with the same institution. But this is a legally complex area. 
 
As a joint account holder, you likely have a right to at least a portion of the funds that were in the checking account. Joint accounts often carry a "right of survivorship" where ownership automatically passes to the other person.  
 
I would recommend taking these steps as soon as possible: 
 
1. Contact the credit union and request a detailed explanation for why the funds were withdrawn. Ask what legal authority they had to do this. 
 
2. Consult with an estate attorney in your area who can review the credit union agreements and advise on your rights. Many offer free initial consultations. They can also help guide you through the probate and estate settlement process. 
 
3. If the credit union is uncooperative, consider filing complaints with the Consumer Financial Protection Bureau (CFPB), your state's department of financial institutions, and the National Credit Union Administration (NCUA).  
 
4. Gather records of the account and any communications with the credit union. This paper trail will help if you need to take legal action. 
 
5. See if any of the essential expenses can be deferred or if you can work out payment plans until the estate is settled. Many creditors are understanding during times of loss. 
 
I hope this gives you an action plan to start resolving this very unfortunate situation. Please seek legal guidance to fully understand and protect your rights during an already emotionally taxing time. Wishing you all the best.

Q: Q: Can a Credit Union drain account to pay for credit card immediately after death?