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Paying Bills After Death: What To Do and What Not To Do.

Updated: Jan 5, 2022

When a loved one passes away, someone will receive the assets (if any) that the loved one left behind. What is not as well known is who is responsible for paying a loved one's bills. Is it the family? Is it the loved one's estate? Who?

It is important to remember that the debts of a deceased person do not normally pass down to children, the heirs of the estate, the Personal Representative, or anyone else. However, there is a very important exception to this rule. A Personal Representative can be required to pay creditors, and in some cases, can be required to reimburse beneficiaries, if the Personal Representative pays out estate funds incorrectly. If the deceased's debts do not exceed the value of the assets, and if the proper procedure is followed, then the creditors will get paid. However, if the deceased's debts exceed the value of the assets (i.e. insolvency), then the creditors lose and cannot pursue the deceased's children or heirs. If a creditor ever asks you to pay a deceased person's debts, you should always consult your attorney prior to paying the creditor.

Although managing your loved one's debts will be part of your job, you should not immediately start paying those bills. Washington has a special creditor's claim procedure that should be followed. If you do not correctly follow the procedure, you could become personally liable for the debts!

Below are some guidelines for what to do and what not to do that can help you avoid liability if you are a Personal Representative. Remember, it a good practice to consult an attorney when administering an estate because special circumstances may exist that can create liability for you even if you follow these guidelines carefully.

1. Do calculate the value of the estate prior to making any payments. If it appears that the estate is close to being insolvent, then contact your attorney immediately and prior to making any payments.

2. Do not make any distributions to beneficiaries until all debts have been paid or an adequate reserve for debts has been allocated. If you make a distribution to beneficiaries that leaves the estate with too few assets to pay off creditors, you may be personally liable to the creditors, or you will be in the unenviable position of having to ask the beneficiaries to give back some of the money.

3. Do not immediately pay debts that existed before death for things such as medical bills, credit cards, or lawsuits. Instead, you should follow the Washington State creditor's claims procedure which requires that you notify all known creditors and publish a notice that states creditors (known and unknown) should make a timely claim against the estate.

4. Do not pay creditors who file late claims. If a creditor does not file a claim within the time established under Washington law (typically four months if you properly filed a notice to creditors or two years if you did not) speak to your attorney and do not pay the creditor. If you pay a creditor who filed an untimely creditor's claim you may be personally liable to the other creditors or to the beneficiaries.

5. Do pay debts that arise after death such as utilities for a house, costs to maintain a home (e.g. property taxes, insurance, etc.), accountant's or attorney's fees, or your Personal Representatives fees.

6. Do continue paying a secured mortgage.

7. Do work with an accountant to determine if any income or inheritance taxes are due.

8. Do keep at least one account open in the decedent's name, if possible, to deposit refund checks into until a probate has been started. Many times refund checks will come in the name of the decedent and if you have closed all bank accounts in the decedent's name it can be difficult to deposit these checks.

If you have any questions about paying a loved one's bills, you should speak with the attorney assisting you in process of administering your loved one's estate.

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