There is a priority of debts when you die

Over time I have become accustomed to first actions taken by executors when a family member dies. Ironically, one of the first is often to pay off credit card debt. Nursing home expenses and even funeral bills might initially be ignored or delayed during a time when survivors are seriously concerned about final VISA or Mastercard bills.

I say, ironically, because credit card debt is unsecured debt, on the bottom of the list of priorities indicated by Pennsylvania and most other states’ laws. I do not want to give the impression that, as an executor you should regard paying bills as unimportant. However, you need to know there is an order of priority and it can be very helpful to know it, especially if there are cash flow issues.

Pay administrative expenses, the funeral home, the nursing home and unreimbursed medical bills incurred within six months of death as a priority.

Administrative expenses include the cost of probate, which is filing the will and related expenses. Attorney’s fees, executor’s fees, accountant fees for final tax returns and so on are administrative expenses. The funeral bill is very high on the list for obvious reasons. It is not to be ignored.

Nursing home and medical bills incurred within six months of death are also very important. If the medical bill is going to be paid by health insurance or the nursing home bill is covered by Medicare or Medicaid you need to confirm this information. If Medicaid paid, there may be a claim under Estate Recovery. Do not forget this if it is applicable. It means the Pennsylvania Department of Human Services; Third Party Recovery could be a creditor of the estate when a house is sold.

Here is one place of many where an attorney experienced in elder law and estates can be helpful in sorting through what needs to be paid, when, and from what source.

Sometimes an executor pays administrative expenses or other priority expenses or the cost of the funeral from his or her own funds initially. If you do this you should keep a record of this and repay yourself after an estate account is established. The same goes for expenses paid from a joint ac