Debt owed to medical providers continues to be a source of pain and stress for those dealing with a loved one’s death. These can be in the hundreds of thousands when the deceased suffered a prolonged illness.
While heirs are never personally liable for those debts, they can eat away at the benefit the deceased person intended to leave behind for family, friends, or important causes. What’s worse, as many older couples own most or all of their property as community property, the debt can threaten the surviving spouse’s savings.
It’s the duty of the trustee or executor to manage the debts of the deceased, while faithfully serving the estate. If there is a probate, the executor will have to notify all known creditors, and the creditors will need to file a claim in the probate case in order to be paid. Debts have an order they must be paid off in. Medical debt from the deceased person’s last illness is paid after debt to the state of California and estate administration expenses, but before other debts such as credit cards or personal loans.
If there is no probate because the assets pass by trust, the trustee can use a legal notification to shorten the time that the creditors have to bring their case or lose it forever. Negotiation is often expected in order to settle the matter quickly. The creditors have one year after the death to make claims in probate court, or they can no longer enforce the debts.
This statute of limitations blocks creditor claims after one year from the death, whether or not the creditor knew of the death.
If your loved one has died with significant medical debt, it’s important to get legal guidance for the best possible outcome for your family. We help trustees carry out their legal duties while maximizing what’s left for beneficiaries. Give us a call or tap the button to set up a consultation today.