When a loved one dies, the sense of loss can be overwhelming. Yet even in the midst of grief, there’s usually a barrage of urgent things the family has to attend to: making funeral arrangements, handling the estate, perhaps caring for a house or even re-homing a beloved pet. The “to do” list can grow by the hour.
And then there’s the biggest stress-inducer of all: the outstanding bills. Depending on the circumstances of your loved one’s passing – and especially if you are tasked with the role of serving as executor of the estate – you may feel as if you’re suddenly responsible for every debt your family member left behind. On top of that, you might start getting calls and letters from aggressive debt collectors demanding immediate payment and threatening legal action.
What Financial Experts Say About Post-Mortem Debt
If you’re in that situation, we have what we hope will be some good news: you can relax a bit. Despite your worries, chances are the situation isn’t as urgent as you fear. In fact, say financial experts, it’s best, even necessary, to wait and proceed carefully and deliberately.
Navigating estate debt requires patience and a clear understanding of your legal obligations. That’s according to this article from USA Today, written by financial reporter Medora Lee. She spoke with several financial experts who warned executors and agents to resist the pressure tactics of collectors who will push to get their debts paid first. There’s a proper order in which obligations need to be met, Lee explains, and many of your loved one’s debts may not need to be paid at all. At the very least, there’s often plenty of room for negotiation.
Let’s take a more in-depth look at how to handle these financial demands.
Why Deceased Account Bills Keep Arriving
Quoting experts, Lee begins: “Bills don’t stop coming after a loved one dies.” She adds, “A deceased person’s mortgage or rent, utilities, tax, loan payments and final credit card and medical bills, among others, will continue to come.”
This can be deeply overwhelming, she notes, since the likelihood is strong that you’re already dealing with your own household bills, as well as grieving your loved one’s loss.
But, she says, experts tell us not worry, and that many bills don’t need to be paid immediately. In fact, some can be negotiated down, and many more may never need to be paid at all.
Managing Estate Expenses: When to Pay and When to Delay
Understanding the timeline for estate debts can save you from making costly financial mistakes.
“We’re all raised to pay bills on time or early and pay the amount they send you,” says Delaney Haley, who is the certified trust and fiduciary adviser—as well as head of customer operations and experience—at the estate settlement platform Alix. “It’s ingrained in us. When someone dies, it’s very hard not to pay all the bills, but there is a time to pay, and then, there is a chance to negotiate.”
And, she adds, none of those times is immediately after someone dies or when you receive the bill in your inbox.
Prioritizing Bills: Which Creditors Get Paid First?
So, Lee poses, what should people do when their loved one’s bills begin to arrive?
Haley says it depends. If you need to keep electricity on in a property, for example, “that’s a little different.” It’s important to pay mortgages, taxes, insurance, and utilities related to the property, she says, and to keep receipts and records so that when the estate settles, you can be reimbursed.
But there are a handful of other bills, like hospital/medical and credit card bills, that should be collected and set aside. Experts say: even if aggressive debt collectors contact and threaten you to pay, it’s important to resist.
Consumer Protection: Understanding Executor Personal Liability
Many family members worry about being held personally responsible for a relative’s financial obligations.
Lee writes, “You’re never personally responsible for paying a deceased person’s debts from your own assets, unless you were a joint account holder or cosigner on a loan or you live in a state that requires a surviving spouse to be responsible, according to the Consumer Financial Protection Bureau (CFPB).”
Because of this, says commercial real estate brokerage founder Chase MacLeod, “The hardest thing to do is wait, take a deep breath and take inventory.” MacLeod, who has been through this process with family and friends, continues, “You have to see what liquidity is compared to outstanding bills first. Then there’s a strict order of operations of what gets paid first.”
Certain debts, like a credit card, are considered lower-priority. If paying that debt first saps money to be used for higher-priority debts—like funeral expenses—experts warn that the executor or family can be held liable for coming up short.
Step-by-Step Probate Administration Process
Lee says that these are the steps to follow when someone dies.
First, determine the estate representative, who likely has been named in the person’s will. If there is no will, you can file a petition to the probate court to name a representative. “The estate representative will notify known creditors and heirs and publish a public notice in a local newspaper to alert unknown creditors of the person’s death,” Lee writes.
Haley adds that state laws determine how long notices must be published, or how long the creditors have to respond. And once the creditors are notified, fees and interest are frozen. They cannot accumulate.
The ball is firmly in the creditors’ court at this point: if they don’t respond in writing by the deadline, they don’t get paid. This is why it’s important not to pay the bills immediately, Haley says.
Identifying Debt Collection Scams and Predatory Tactics
Grieving families are frequent targets for financial fraud, making caution essential.
The CFPB says that debt collectors are required to provide specific information about a debt during your first communication with them, or within five days of that first communication. This is usually in writing.
“If the collector refuses to give you any information about the debt – even though you are a surviving spouse, parent of a deceased minor, or personal representative of the estate – it might be a scam,” the article warns.
Negotiating Unsecured Debts and Credit Card Balances
The next step, says MacLeod, is that it’s important to inventory your loved one’s assets. “You need to know how solvent the estate is,” he says.
Then, you can collect the bills and pay them in order of priority. Lee explains, “Administrative and ongoing expenses such as funeral costs and ongoing property maintenance like utilities, mortgage and taxes are first; then secured debts, or loans backed by collateral such as a car loan; and lastly, bills and unsecured debt such as medical and credit card bills that have no collateral attached to them.”
MacLeod says that unsecured debts are the most negotiable: “They know they have to compete against other creditors and may get nothing because there’s no collateral behind it. Probably, the least negotiable is taxes.”
The CFPB adds that if there’s no money or property left in the estate, or if for any other reason the estate can’t pay, the debt will probably go unpaid. “For example, when state law requires the estate to pay survivors first, there may not be any money left over to pay debts.”
Finding Professional Legal Support for Estate Settlement
There’s no need to navigate these tricky waters by yourself, and experts agree. “Enlist professional help if settling bills feels too overwhelming while you’re grieving,” Lee says.
The CFPB suggests finding a local lawyer who specializes in probate, as well as estate and debt collection. Some legal aid offices or legal clinics may offer free services if you meet certain criteria.
Lee adds: “Servicemembers should consult their local Judge Advocate General’s office, and older Americans and their caregivers can try the Eldercare Locator, which provides trustworthy local support resources, including free legal aid for eligible older adults.”
Comparing Professional Estate Settlement Services
Some private companies, like Alix or their competitor Elayne, provide full-service estate settlement. Haley explains that these companies work with families to accomplish various tasks, like filing for approval of the estate representative, notifying creditors, inventorying the estate, collecting bills and helping to decide whether to pay or negotiate them, and ensuring taxes are completed.
“Fee schedules vary, so examine your needs and budget to help decide,” Lee writes, concluding the article. “For example, Alix charges 1 percent of the estate value, while competitor Elayne charges a flat fee no matter the estate size.”
Naturally, the team at Life Point Law is ready to help you and your family with any and all estate-related matters. Please let us hear from you.
Rajiv Nagaich – Your Retirement Planning Coach and Guide
Rajiv Nagaich’s newest program on PBS, called Designing Your Ideal Future, is bringing Rajiv’s powerful message to Americans from coast to coast. This engaging and challenging PBS show is prompting thousands to take a fresh look at the type of planning that will help them succeed in retirement.
In this one-hour PBS special, Rajiv Nagaich takes viewers step-by-step through the principles of creating a retirement plan that truly supports the life you want to live. Instead of generic check-the-box paperwork, Rajiv reveals how to infuse your perspective — your values, goals, and priorities — into every legal document and life plan component so your plan becomes a living system for your future.
Designing Your Ideal Future includes insights from real-world planning examples and a live Q&A with Rajiv Nagaich that answers viewer questions about retirement planning, legal readiness, and family communication. It’s perfect for anyone approaching retirement, currently retired, or responsible for a loved one’s future care — and for those who want a clear, effective approach to planning that prioritizes personal choice and quality of life.
Secure Your Financial Legacy Today
You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then these materials are your key to retirement success.
Visit your local PBS station’s schedule to find airtimes and learn how to access companion resources — including a free Legal Readiness Quiz and tools to help build your complete LifePlanning system.
Don’t remain among the millions of Americans sleepwalking their way into a retirement they never wanted. Instead, your retirement can be the exciting and fulfilling life you’ve always hoped it would be. Start by watching, reading and sharing Rajiv’s important message.
And remember, Age On, everyone!
The post When a Loved One Dies, Don’t Feel Rushed or Pressured to Pay All Their Bills appeared first on Home.
