Managing regular bills is enough work when they’re your bills—but what if someone you love has died? You’re grieving and trying to keep up with your own household. A recent USA Today article, “Death doesn’t stop bills from coming, but you don’t have to pay them all,” explains what needs to be done and who needs to take action.
Keeping the lights on and the mortgage paid is one thing. Taxes, insurance and any other utilities on the person’s home need to be kept current. If they are paid out of your own pocket, document everything with receipts and records because you should be reimbursed when the estate is settled.
There are other bills to anticipate but not necessarily pay immediately. Final hospital and medical bills will arrive, along with credit card bills. They may be sent to collections, and you may receive aggressive calls or letters threatening dire consequences if they aren’t paid. But unless you were a joint account owner or a co-signer on a loan, you aren’t personally liable for someone else’s debts. There are some states where a surviving spouse is required to pay a deceased spouse’s debts; speak with a local estate planning attorney to find out if this is your situation.
It’s hard, but the best thing to do is wait until the estate’s obligations and assets can be properly evaluated. Take inventory of the person’s debts. There are rules about what bills get paid first. For instance, funeral expenses are often given high priority in estate administration, though specific obligations vary by jurisdiction.
When someone dies, the first question is, did they have a will, and who was named as their executor? This person is in charge of finances. If there were no will, a family member would need to file a petition with the probate court to have an administrator named.
The estate’s representative will need to notify known creditors and heirs. A public notice is published in a local newspaper to fulfill a requirement to notify unknown creditors of the person’s passing. Every state has its own laws about how long notices are to be in print and how much time creditors have to respond. Again, talk with an estate planning attorney to be sure local laws are being followed.
Be extra careful of scams during this time. Once it becomes known a person has died, scammers ramp up their attempts, and you may be targeted by mail, phone, or email. Debt collectors are required to provide specific information about the debt, usually in writing. If the person contacting you won’t provide any information, hang up the phone or delete the email—it’s entirely likely to be a scam.
The representative needs to create an inventory of assets, establish an estate tax ID number (EIN), and open an estate bank account. All bills should be paid from this account using the estate's assets.
Funeral costs, property maintenance, and taxes come first, followed by secured loans like a car loan, followed by bills and unsecured debt. Medical bills and credit cards are unsecured debt; there is no collateral property attached to them.
If this feels overwhelming, and it may, consider bringing in an estate planning attorney to help. Those with experience in dealing with the probate process, estates, and debt collection will help, allowing the family to focus on grief and healing.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. We help individuals and families establish living trusts, wills, powers of attorney, advance healthcare directives, and other essential estate planning documents designed to protect their loved ones and preserve their legacy. Schedule a quick and easy consultation with estate planning attorney Sedric E. Collins, Esq., or call 323-900-5450.
