March 27, 2008
The Internet is a wonderful place. No matter what the topic, there is an article about it that is dead wrong.
Such is the case with a recent story (in the fullest extent of the word) I read, “When Someone Dies, Who Is Responsible for Paying His Debts?” that appeared here. This story is full of so much misinformation, it’s hard to know where to start.
When someone dies (the law calls this person a “decedent”), all assets owned by them in their individual name automatically become part of their “estate.” This is true even if a probate proceeding is not filed. What does this mean? It means that the estate is liable for any bills owed by the decedent at the time of their death, and that these assets should be used to pay the bills.
What if there aren’t enough assets to pay the bills? It’s simple: the bills don’t get paid (with one exception, discussed below).
What if there are medical bills? Generally,
medical bills are treated no differently from credit card bills, although some states have limited exceptions.
If you open an estate, and are named as executor or personal representative of the estate, are you responsible for paying these bills? You do not assume any personal liability for the decedent’s bills simply because you are named executor of their estate.
What happens if the decedent’s bills don’t get paid? Nothing. The creditor will write off any unpaid balance and close the account. That’s it (with one exception, discussed below).
Here’s the exception: if someone is jointly liable with the decedent on a bill, such as a joint account, or a guarantee of a debt, that person remains liable even though the decedent has died. In some community property states, a spouse also may be liable.
If you’re in doubt, don’t listen to the collection agent who’s telling you you need to pay. Many, many, many times they are simply wrong. Check with a lawyer before you pay anything.