Reasonably Ascertainable Creditors

When a loved one dies, whomever you name as the personal representative (executor) under the will or the trustee under a trust will be charged with the responsibility of ensuring that your estate or trust satisfies any outstanding creditors upon your death. Creditors might appear in the form of credit cards, hospital or medical bills, car payments, mortgage payments or a host of other debts you’re responsible for.

If, after your death, your loved one simply distributes the assets without satisfying your creditors then the law holds that loved one personally responsible for your debts. It’s therefore important for your loved one to follow the legal process. That process provides that he or she must search for “reasonably ascertainable” creditors. Usually this is accomplished with the assistance of your estate planning attorney.

It’s fairly simple to find most “reasonably ascertainable” creditors since they typically invoice periodically. With electronic communication and payments becoming more common, your loved one not only should search through the mail for these invoices, but also through email as well as review automatic payments generated from the decedent’s bank accounts. If you have a significant amount of electronic payments, then you should speak to those that you have named in your legal documents about this and perhaps give them access to your electronic accounts.  

With recent probate and trust administration files, I’ve noticed that finding in-home caretakers after my client’s death can sometimes pose a challenge. While many employ caretakers from established licensed businesses providing that service, it also appears that there’s a significant underground economy consisting of non-licensed individuals, or even friends and neighbors, who get paid for helping elderly folks who need it.

The caretakers might simply take the individual to the grocery store, or they may perform other tasks like cooking meals, driving to doctor’s appointments, and assisting with check-writing and other bill-paying services. It’s dangerous to have a person in your home performing these tasks without insurance, bond, or background checks, but I can tell you anecdotally many are so employed here in Southwest Florida.

Because so many of our elderly residents’ families live in far away states, it’s no wonder that those losing physical or mental capacity turn to others to help perform daily tasks. “I don’t want to be a burden to my children” is a refrain I’ve heard on more than one occasion.

Nevertheless, when an individual who has been cared for passes away, there might be loose ends or unpaid bills for services outstanding. The personal representative or trustee may not even know that there was anyone helping with these tasks or if they had been paid in full.

So, if you are one of those who does employ in-home aids, please first ensure that they are insured, licensed and bonded. You should also let your loved ones know who you have employed, how often they come to your residence, how much their charges should be, from which accounts those payments are generated, and what accounts those individuals have access to. I would go so far as to suggest that a close relative should receive copies of the statements (print or electronic) to monitor activity within the account.

Another issue that may become a problem with many decedents is leased vehicles. Typically, car leases do not expire upon the lessor’s death. That means that if you pass away one year into a three-year lease, your estate may be liable for the final two years of payments. Before leasing an automobile, ensure that you understand the leasehold terms applying to your death or disability, and let whomever you have named in your legal documents to take care of your affairs know about the transaction.

You’re putting a great deal of responsibility on those that you name as your personal representative and/or trustee. It’s incumbent upon you to keep those individuals in the loop as to your financial life, particularly if you should begin to fail mentally or physically. If you want to learn more about this subject, I’ve written a book Legal Matters When a Loved One Dies. You can obtain an electronic copy for free on my website: http://estateprograms.com/resources/#books.

© 2018 Craig R. Hersch. Originally published in the Sanibel Island Sun.

2019-01-09T15:16:15+00:00

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