When a loved one dies, grief isn’t the only thing that arrives at the door. Bills keep showing up, too.
Mortgage statements, utility bills, medical invoices and credit card balances don’t disappear simply because someone has passed away. In many cases, creditors begin reaching out long before a family can adequately grieve — creating intense pressure to start paying bills immediately, especially for people who have spent their lives doing exactly that whenever a statement arrives.
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But estate experts say that instinct can backfire. The period after a death is one of the few times when paying a bill as soon as it arrives may not be the smartest financial move. In some situations, families end up paying debts they aren’t personally responsible for. In others, they may inadvertently disrupt the legal process that determines which creditors get paid first.
“There is a chance to negotiate,” Delaney Haley, a certified trust and fiduciary adviser and head of customer operations at Alix, a firm specializing in estate settlement, told USA Today (1). The key, she says, is resisting the urge to act before understanding what assets, debts and obligations actually exist.
Most debts don’t transfer to surviving family members
One of the biggest sources of confusion after a death is who is ultimately responsible for the deceased person’s debts. Many surviving relatives assume that if a parent, spouse or sibling owed money, the obligation automatically becomes theirs.
In most cases, that’s not how it works. Surviving relatives generally are not personally responsible for a deceased person’s debts unless they were a co-signer, a joint account holder or otherwise liable under state law, according to the Consumer Financial Protection Bureau (2). Creditors typically seek repayment from the deceased person’s estate, which consists of the money and property left behind.
It’s an important distinction: while legitimate creditors have the right to pursue claims against an estate, surviving relatives should be cautious about assuming responsibility for those debts before understanding the legal situation.
The stakes can be significant. Americans now collectively carry more than $1.25 trillion in credit card debt (3), according to the Federal Reserve Bank of New York, while medical debt remains one of the most common financial burdens facing households.
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Why some bills should wait
Not every bill is treated equally when someone dies. Probate laws generally establish a hierarchy that determines which obligations must be paid first.
Expenses needed to preserve or administer the estate, along with funeral costs, are often paid early in probate. Secured debts such as mortgages and auto loans are treated differently because they are backed by collateral, while unsecured debts such as credit cards, personal loans and medical bills usually fall lower in the payment order.
That hierarchy is one reason experts caution against immediately writing checks to every creditor who sends a bill. If an executor pays a lower-priority debt and later discovers there isn’t enough money to cover higher-priority claims, the mistake can create legal and financial complications.
“The hardest thing to do is wait, take a deep breath and take inventory,” estate expert Chase MacLeod told USA Today. Before paying anything beyond essential ongoing expenses, families should determine what assets exist, what debts are owed and whether the estate has enough resources to cover them.
Negotiation may be possible
Credit card issuers, hospitals and collection agencies often know that estates may have limited assets and competing claims. Because unsecured creditors are usually paid late in the probate process, they may accept reduced settlements rather than risk receiving little or nothing (4).
Taxes are typically less flexible and government claims often receive priority treatment under estate laws. Even so, experts say it makes sense to understand the estate’s full financial picture before making major payments.
If you’re managing a loved one’s affairs after their death, gather financial records, identify assets and determine who has legal authority to act on behalf of the estate. You should continue paying essential expenses such as mortgage payments, property taxes, insurance and utilities that protect estate assets.
It’s also important to document everything. Keep detailed records of every payment and communication, ask creditors to provide claims in writing and don’t assume you’re personally responsible for debts unless you’re a co-signer or joint account holder. When in doubt, consult a probate attorney before paying large balances (5).
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
USA Today (1); Consumer Financial Protection Bureau (2); CNBC (3); Experian (4); American Bar Association (5).
This article originally appeared on Moneywise.com under the title: When a loved one dies, here are the bills you should pay ASAP, which can wait, and the ones you may never have to touch
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
