Who’s responsible for paying your parent’s medical bills after their death?
This is a common question. What’s important to understand is that the answer is the same regardless of one’s involvement or relationship with their parents. It doesn’t matter if you were the caregiver, advocate, or even estranged. The answer is the same. Debt “including medical bills” does not pass down to the survivors of the deceased. All debt including medical bills are paid by the deceased’s estate via probate court. The probate court process must be completed within the state the deceased legally resided in. There is only one exception an adult child would be responsible for any debt. That would be if they signed a contract and personally guaranteed payment. Finally, if the deceased has more debt than assets within their estate, the remaining debt is written off by the creditors. In other words, as the old saying goes “you can’t squeeze blood from a turnip!”
If there is one take away from this article it’s this – everyone has an estate.
The key point and solution is to understanding how the estate administration closing process works. The term estate in its simplest form means, ” the things left when someone has died”. The difference in the estate administration process for a family is not necessarily based on the “wealth” of the estate, but if there was a “plan” for the estate. National expert and author, Peggy Hoyt, Elder Care Attorney likes to say, “If you don’t create a plan for your estate – your home state will create one for you!” In legal terms, estate administration means that if there is no last will and testament in place, the court will appoint someone to act as an executor to oversee that the process.
When a person dies, the law requires their estate to be reported to probate court. Probate court was designed for the following four reasons:
- Collection and reporting of the deceased’s assets.
- Payment of debt against the estate.
- Payment of estate taxes.
- Distribution of any remaining assets to the legal next of kin.
Probate is nothing to be afraid of, it’s just labor intensive.
How to Avoid Probate
For the reasons above, many people choose to save their family from the time, and finances involved with the probate process. This is achieved by the creation of a legal entity called a living trust. Living trusts were designed to place a person’s assets in a revocable trust ,in which they are the trustee of the trust. Translation – a person can control all the assets within their own trust. The primary benefit of the trust is to avoid probate. This provides the executor of the estate the ability to distribute assets sooner. The above explanations of the terms probate and living trust just scratch the surface. Each of these concepts are an entire topic unto their own.
In closing, adult children should know that upon their parent’s death, they are not responsible for medical bills, or any debt tied to the estate. This is with the caveat of them not personally signing, or guaranteeing any contracts, notes or loans. If they did sign anything, they will be held responsible.
Things to remember:
- Many medical collection agencies may call, badger or even imply that you are responsible – know there are rules set up by the federal government on your behalf to follow. Check with the state you live in and follow the probate court laws. Note, some states may not require filing. This is determined by the monetary size of the estate.
- If there was an estate plan in place – follow it.
- If there was no plan, you must adhere to the probate protocols.
- When in doubt – it’s always wise to seek out legal advice, verses receiving well indented miss information from friends and family
Please, don’t just think about creating a plan for your end of life wishes – put the plan in place. It’s one of the kindest gifts you can give your family. As Benjamin Franklin said, “By failing to prepare, you a preparing to fail”
Do you have a plan in place? If not, why not? Have you ever had to file in probate court? If so, what was your experience? Please share your thoughts or experience.