Does the Beneficiary Have to Pay Bills Left by the Insured?

So you discovered that you are a beneficiary of an insurance policy; unfortunately the policy owner has several bills left unpaid. Are you responsible to pay all of these bills? Where will you get the money if you have nothing kept in the bank?

Probate Estate
Probate is a legal procedure wherein the estate of the deceased is handled through a surrogate court. All the claims, disputes and distributions are handled through this manner. Normally an executor, who acts as the personal representative of the estate executes all that is instructed by the probate court. He or she will handle the distribution of the estate and have no right to change it unless given the authority to do so by the court.

Preparations prior to Probate
If the deceased has several unpaid bills then it would be wise to list all of these debts. It would be best if your can supply it with proofs of documentations for easier verification. Some of the possible unpaid bills which the deceased may have left behind include the following:

Mortgage
Property taxes
Condominium fees
Lines of credit
Federal Income tax
State Income Tax
Vehicle loans
Utility bills
Cell phone bills
Storage fees
Loans on insurance polices
Loans on retirement accounts

Solvent Estate Vs Insolvent Estate
Solvent estate is a deceased asset which contains enough assets for the payment of the deceased’s bills while insolvent estate is the opposite. If this happens then the declared personal representative will need to have a judgment call with regards to the bills that should be prioritized. At times, asking assistance from probate lawyers will be of great importance because they can assist you in identifying the sufficient amount which should be paid to the deceased debtors.

Administrative Expenses Vs Final Bills
Administrative expenses involve utility bills, property taxes, lines of credit, mortgages, storage fees and condominium fees. These set of bills should be regularly paid by the beneficiary while the estate is undergoing probate.

Final Bills involve all types of loans like credit card bills, personal loans, loans on retirement plans and life insurance, income tax as well as cellular phone bills. These types of bills should not be paid by the beneficiary but should be handled by the personal representative.

In some cases like vehicle loans, the decision to pay or not to pay rests on the beneficiary. The beneficiary has to make his own judgment call in regards with these matters especially if he or she wishes to keep the vehicles and real estate of the deceased. But if the beneficiary decides not to hold on to these properties then he or she has the option not to bother it.

Bills after Probate
The moment a Personal Representative is appointed by the probate judge then he will be responsible to pay all the remaining administrative expenses and final bill of the deceased through liquidation of the decedent’s assets. The beneficiary is stripped from all responsibility to pay any of these debts. Nevertheless, he or she is authorized to reimburse the earlier amount used to pay the administrative expenses.