Busi­ness you need to know when a fam­ily mem­ber dies

Daily Local News (West Chester, PA) - - BUSINESS -

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, col­li­ton@col­li­ton­law.com. 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.

Janet Col­li­ton Columnist

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