Solving the Probate Puzzle - Part Three

                                                                                         

Dead Men Don't Wear Plaid (or Pay Bills!)    Dead Men Don't Wear Plaid

Anyone remember this old Steve Martin film? A common probate question is whether family members can continue to use a decedent's money and bank account to pay bills before probate is opened. The answer is dead men cannot pay bills. If you are the friend or family member of someone who has passed away and are not a joint account holder with rights of survivorship, do not use the deceased's credit, debit card, or bank accounts after his or her death. This is true even if you are named as the personal representative or executor under a will. 

What if you are named as the executor in the will?

Even though you are named in the will, if the estate is not open, you do not have the authority to manage the decedent's money or other assets. You must first apply to the court to be qualified as the executor and open the estate. As soon as you are qualified as the executor, you should promptly close the decedent's personal bank account and open an estate bank account. Do not leave the personal accounts open longer than necessary or deposit funds into those personal accounts or pay bills with them. Close the personal account and open an estate account with the funds from the decedent's personal account or checks received after the decedent's death.

What if there are bills to pay or the decedent has automatic monthly payments on his or her bank account? Should I pay them? If not, won't this be a problem?

No, creditors know that dead men don't pay bills. Creditors are familiar with the probate process. They know a probate estate must be opened before the executor has the authority to pay bills. Creditors generally make a notation on the account when you notify them of a death. They will wait for the estate to open and then file a claim for the amount due. As executor, you will review the claim for the bill and approve or deny it. 

What if you are the decedent's agent under a power of attorney?

Durable powers of attorney are not valid after death. Therefore, agents under a power of attorney should not use the decedent's credit or debit card after the moment of the decedent's death to pay for anything - not even funeral expenses. If the decedent did not have a pre-paid funeral, family members may need to advance money for the funeral and then get reimbursed from the decedent's funds once the estate is opened.

What if you had permission to use the decedent's debit or credit card before death or you can access their online bank account?

If so, that permission also ended at death. The same goes for bank accounts. Don't deposit checks written to the decedent after the decedent's death or write checks on the decedent's account. Even if the decedent had online banking and you know the password, don't make transfers or payments from the decedent's bank account after death. After-death payments and transfers are red flags of possible estate theft or fraud. Courts routinely request and review bank statements and credit card statements going back to the date of death during the probate process.

What can I do before the estate is opened?

- You can preserve the decedent's assets and start making a list of those assets for the estate inventory.

- You can gather and collect receipts for funeral expenses or other expenses paid by family members that the estate can later reimburse.

- You can notify the decedent's bank and any known businesses (such as a power company or cell phone carrier) who may receive automatic payments from the decedent's bank account. As discussed above, companies know the probate rules and what happens when someone passes. They will wait for their money and file a claim against the estate at the appropriate time. Don't use automatic debits as a justification for using a decedent's bank account after death. 

- You can also notify social security and other government agencies of the death.

This may seem like a long list of "don'ts" but if you follow these tips, your job as executor will be easier! Remember probate varies from state to state so always refer specific questions to your trusted attorney. For more great information about probate and protecting your loved ones with peace of mind estate planning, take a look at our valuable book and articles. Our materials are full of tips and advice. All materials are written by us and provide detailed North and South Carolina information designed to help anyone with estate planning questions. You can download your free copy of our book here.

If you haven't seen the movie, Dead Men Don't Wear Plaid, the trailer is here.  

Nancy Roberts
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