Business you need to know when a family member dies
When you are dealing with illness and grief the chances are that you may not be able to pull together what to do when your husband, wife, parent or sibling dies. You might look for a Will or the location of bank accounts but decisions likely pass in a blur. This column is to help you when tragic events happen so that you know what to look for and what to do.
• Social Security. If your family member was receiving Social Security benefits, there may be a reckoning with Social Security for the last month of benefits. It is difficult to determine whether the last check was paid prospectively or retroactively. The difference is that, if you decide to close the account that receives the Social Security checks too soon, the government might reverse the payment giving you a negative balance.
It is best to keep the account open for a few months to be sure. In the meanwhile, funeral directors are often helpful both in notifying Social Security, so you do not have to, and in providing death certificates – as many as you need and you may need several. Be sure to discuss these issues with the funeral director.
• Social Security – If you are a spouse. If your husband or wife passes and his or her Social Security was higher than yours, then the net effect will be that you will ultimately receive the same monthly benefit that he or she would have received. If
your benefit was higher, it will stay the same. There is also a $255 death benefit that you can claim from the government in either case.
• Creditors. You should not assume that, because you are the closest surviving relative of the decedent you are responsible for that person’s bills. You might decide to pay them as a matter of personal pride or perceived moral obligation but legal responsibility is something different. The bills will first follow the estate of the deceased person and Pennsylvania and other States have specific rules concerning how bills are to be paid for an “insolvent estate,” that is, one where bills are higher than assets. In some cases where no estate is filed, there may be nothing against which creditors could make a claim.
If you are dealing with an insolvent estate, the State where your loved one resided at death lists an order of distribution in which bills are to be paid. In Pennsylvania at the very top are costs of administration such as filing fees, Executor’s fee and attorney’s fee and payment of funeral bills. Do not pay credit card bills first if you do not think there is enough in the estate to pay all bills. In Pennsylvania, medical bills, including payments from Medicaid for medical care incurred within six months of the person’s death are given higher priority than older medical bills. Credit card bills are unsecured debt and are on the bottom of the pile.
If there is secured debt, such as a loan on a car, the creditor could take the vehicle.
Usually other people do not owe on the decedent’s debts but there are exceptions. Although collection agencies may call following the death of a loved one, they are often not attuned to who owes what and under what conditions nor do they often care so if you are unsure of your rights check with an attorney or someone who knows the rules.
There are people who can be accountable on a decedent’s debts. If you cosigned a loan or guaranteed payment on a debt, you might be held accountable. A spouse, under the doctrine of “necessaries” might be found to owe for certain specific bills regarding support of a deceased husband or wife such as housing or care but not for other bills. Get help if you are unsure.
Pennsylvania has a “filial support” law that has been used to find children responsible for bills of “indigent” parents but this law has generally been applied only to long term care. Again, legal help should be sought if any claim for these bills is made.
Direct beneficiaries of life insurance policies and joint owners of property would generally not be responsible for the general debts of the estate.
Hope this helps. When there are many bills, proceed cautiously and know your rights and responsibilities.
Janet Colliton, Colliton Elder Law Associates, PC, limits her practice to elder law, life care and special needs planning, Medicaid, estate planning and estate administration and is located at 790 East Market St., Suite 250, West Chester, Pa. 19382, 610-436-6674, firstname.lastname@example.org. She is also, with Jeffrey Jones, CSA, co-founder of Life Transition Services LLC, a service for families with long-term care needs.
Listen in to radio WCHE 1520 “50+ Planning Ahead” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care, on Wednesdays at 4 p.m.