Credit Union’s taking your money when you die?

I heard an interesting case from an estate planning attorney this week.  A client passed away and had both a credit card and checking account at the credit union.  The checking account was joint with his wife (joint tenants with rights of survivorship) meaning that the moment the client died the cash in the account become the wife’s.  With unsecured credit card’s, historically credit issues could only get their hands on money in your probate estate (meaning anything that is not owned JTWROS or does not have a beneficiary designation), but this credit union had written in the unsecured credit card agreement that they had the right to take any assets held by their institution.

So the client had $10k of credit card debt and $8k at the same credit union in a checking account.  The credit union took the $8k in the checking account to pay down the credit card.  So moral of the story…read your credit card agreement carefully or keep your bank accounts and credit accounts at different institutions.

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