Colliton

count with the decedent.

The executor’s job is to pull together the assets that are going to pass by will and the bills or debts to be paid, then to pay the debts, including taxes and expenses of probate, and distribute the remaining funds to the beneficiaries as the will directs.

Some assets, like joint bank accounts, POD (payable on death) and TOD (transfer on death) accounts, and life insurance and retirement funds with beneficiaries pass directly and not through the will. Except for life insurance, they are still subject to Pennsylvania inheritance tax.

If there are not enough assets in the probate estate to pay all the bills, Pennsylvania and other states by law list an order of distribution in which bills are to be paid. At the top are costs such as the costs of administration of the estate and shortly thereafter, payment of funeral bills. Medical bills, including payments made by Medical Assistance 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.

Secured debt needs to be considered too. A mortgage on the house or loan on the car is often resolved by selling the asset and paying the debt from the proceeds of the sale.

If you are contacted by a creditor following a family member’s death demanding payment you need to know whether you are legally responsible or not and the priority of payments. You might or might not be responsible.

You also need to know the estate bills that are deductible for inheritance tax purposes and those that are not. Deductions including the final funeral bill and related expenses can substantially reduce the cost of the estate and allow for greater distributions to beneficiaries. Janet Colliton, Esq. is a Certified Elder Law Attorney and limits her practice to elder law, retirement and estate planning, Medicaid, Medicare, life care and special needs at 790 East Market St., Suite 250, West Chester, Pa., 19382, 610-436-6674, colliton@ collitonlaw.com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, cofounder of Life Transition Services LLC, a service for families with long term care needs. Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.