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In the midst of dealing with the loss of a loved one and planning a funeral or wake, the task of paying the final bills and expenses of a loved one can be overwhelming. This can be especially difficult if the deceased didn’t keep a clear record of bills that needed to be paid or if lived alone and others weren’t aware of what expenses they had. However, once the funeral has taken place, the estate will need to be settled and part of that entails paying a loved one’s final bills and expenses.
The Estate and Probate
When an individual passes away, their last will and testament will be submitted to a probate court in order to undergo the probate process, which is the process that determines whether the will is valid. The process is usually initiated by the individual named in the will as the personal representative (executor), or a probate attorney, hired for this purpose by the court (if there is no will or if the person named in the will is unable to fulfill that responsibility). Once the last will and testament has gone through the probate process (for more on the probate process read our article: “What is the Probate Process?”), the personal representative can move onto settling the estate.
Settling the Estate
The personal representative will now track down all the assets of the deceased, including life insurance payouts, bank accounts, and any other assets solely owned by your loved one. These assets will be deemed to be “owned” by the estate and the executor will have to legally transfer ownership of the assets to the estate as the new owner. If you are the personal representative you may want to consider purchasing NOLO’s Executor Bundle to provide you with practical and simple guidance in fulfilling your responsibilities as the executor of an estate.
Note: Before the personal representative is able to pay final bills they will likely need to obtain a death certificate, as well as have a copy of the last will and testament to provide proof that they have the legal power to pay the deceased’s bills and close the accounts.
The personal representative will then begin paying all of the final bills on behalf of the deceased (they may also contest or dispute bills they think are not valid). Taxes, credit card bills, income taxes, funeral expenses, administrative expenses, final medical bills, and any other types of expenses that your loved one would have been responsible for, will be paid out of the estate’s assets. In short, all outstanding bills should be paid by the estate if they were a valid expense of the deceased.
Email accounts, phone lines, and mail should be handed over or transferred to the personal representative so they will be able to figure out what bills, invoices, and accounts your loved one had. These communications channels will also be useful for creditors to reach out to the personal representative in the case that any bills go unpaid in the meantime. For more information on how to close common types of social media and email accounts please read our Help Center article: “How do I close my loved one’s social media and email accounts?”
Once the personal representative thinks that all final bills and expenses have been paid by the estate they can give notice (the type of notice depends on state law) that any remaining creditors will have to make themselves known to the estate within a specific time frame (also set by state law). Once this period has passed, no creditors can come forward to collect outstanding bills by law.
Family and Heirs
Creditors need to be satisfied before family members, heirs, or anyone else can collect their inheritance from the estate. The amount and items to be distributed will be determined by the estate planning documents, such as the will, will codicils, and trust documents, if any. One way to get around this situation is to have a life insurance policy with your heirs named as beneficiaries. The life insurance benefits can be paid directly to them while bypassing the probate process altogether. If you are interested in seeing how inexpensive life insurance can be visit Policygenius to receive and compare quotes from the nation’s best insurance companies or you can use their widget at the end of this article.
Paying the final expenses and bills of the loved one takes time and is an important part of settling an estate. The personal representative needs to first collect all the assets and bills before carefully going through all of them to make sure which ones the estate owes money to before settling the account and closing it. This process can be tedious and thankless, but it is necessary before moving on with fulfilling your loved one’s wishes as outlined in their will.
The information provided on this website does not, and is not intended to, constitute legal, accounting or tax advice; instead, all information, content, and materials available on this site are for general informational purposes only.