In most cases, if there are outstanding bills in the name of the deceased, these are usually transferred to the estate of that person. So, if you are their next of kin/the Executor of their estate they become your responsibility.
The executor — the person named in a will to carry out what it says after the person's death — is responsible for settling the deceased person's debts. If there's no will, the court may appoint an administrator, personal representative, or universal successor and give them the power to settle the affairs of the estate.
Most claims are informal—that is, they're just ordinary bills, sent to the deceased person, that get forwarded to the executor. The executor has authority to pay these debts as they come in, using estate assets. (Usually, the executor consolidates the deceased person's liquid assets into an estate checking account.)
Most debt is paid by the estate and assets of the deceased
Today, most people die with at least some debt. It could be credit card debt, medical bills, and/or a mortgage on a home, among other things.
An executor/administrator of an estate can only withdraw money from a deceased person's bank account if the account does not have a designated beneficiary or joint owner and is not being disposed of by the deceased person's trust.
Following the death of a worker beneficiary or other insured worker,1 Social Security makes a lump-sum death benefit payment of $255 to the eligible surviving spouse or, if there is no spouse, to eligible surviving dependent children.
Most companies will need proof that the person has passed away, including a death certificate. You also need proof of your Social Security number, residential address, and account number, as well as your proof of identification which can include a copy of your ID.
If you contact the bank before consulting an attorney, you risk account freezes, which could severely delay auto-payments and direct deposits and most importantly mortgage payments. You should call Social Security right away to tell them about the death of your loved one.
For survivors of deceased loved ones, including spouses, you're not responsible for their debts unless you shared legal responsibility for repaying as a co-signer, a joint account holder, or if you fall within another exception.
In conclusion, it's a crime to use a dead relative's payment cards, even if they're no longer able to use them. Anyone convicted of using a card to make fraudulent purchases will face years of imprisonment for deceit, not to mention an identity theft offense will appear on their criminal record.
And in nine “community property” states, including California and Texas, spouses may be equally responsible for debts incurred during the marriage, including medical debt. Other states may have laws that hold spouses responsible for paying certain essential costs, like health care.
Typically, you're advised to keep financial statements for three to seven years. This provides an appropriate amount of time necessary to settle a deceased person's estate, address possible legal or financial obligations, resolving disputes, and filing tax returns.
Summary: Having Power of Attorney does not make you responsible for the principal's debt when they die unless other legal ties obligate you.
It's best to contact all utilities and other providers as soon as possible after a relative's death to notify them of the passing and ask them to terminate automatic payments.
Utilities. Utilities may need to be temporarily kept in the deceased's name, transferred to another account holder, or canceled, depending on the circumstances. Deciding what to cancel after someone dies often depends on that utility and whether anyone else remains in the home.
If your spouse died and you live in a community property state, you may be required to use your jointly owned property to pay off any outstanding debts left by your spouse. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
The SSA cannot pay benefits for the month of a recipient's death. That means if the person died in July, the check or direct deposit received in August (which is payment for July) must be returned.
What is the lump-sum death benefit? Social Security offers a one-time, lump-sum payment of $255 to assist with funeral costs, including cremation costs. Social Security's death benefit program was established in 1935 and the payment was capped in 1954.
The bank account will be frozen until the probate process is complete. If the bank isn't informed of the owner's passing and the account goes dormant, the account may be subject to escheatment, which turns the funds over to the state government.
An executor of a will cannot take everything unless they are the will's sole beneficiary. An executor is a fiduciary to the estate beneficiaries, not necessarily a beneficiary. Serving as an executor only entitles someone to receive an executor fee.
Joint bank accounts
If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank might need to see the death certificate in order to transfer the money to the other joint owner.