An unfortunate reality of life in this country is that a significant financial burden will almost always accompany a tragic medical diagnosis. Beyond the apparent worries about one’s own health and mortality, this leaves many ill Americans and those closest to them, concerned about what will happen to their medical debt when they pass away. Who will be responsible for unpaid bills? Exorbitant medical expenses are particularly true for cancer patients as cancer treatments are notoriously costly and often long-lasting.
The fact that most cancer patients are saddled with significant out of pocket costs, often leading to considerable debt, means that they commonly leave behind medical debt when they die. Does this debt become the responsibility of their loved ones? The answer is usually NO! There are few exceptions, such as when their loved ones signed documents agreeing to pay or act as guarantors on the debt. It is an incredibly difficult position to find yourself in if a loved one has passed away and has left you with their debt, especially if you are not financially stable yourself. It may be that crowdfunding offers a solution to this problem, or you may be able to take out a loan to cover it. However, the creditors can file a claim against the estate of the decedent.
Generally, when a person dies, any outstanding debts they may have are paid out of their estate. Their estate consists of the things a person owned at the time of their death – their assets. They typically include things like bank accounts, cars, homes, and other possessions.
When a person passes away, the executor or administrator of the estate (usually a family member) ensures that any outstanding debts are paid from the estate before any heirs are given their inheritance. Medical debt would be one such debt that must be paid from a deceased person’s estate before their heirs would be entitled to collect their share. In some cases, the debt may exceed the decedent’s estate value, which may leave no estate left for their heirs to inherit from.
It is possible that a decedent may own certain types of property that may not be accessible to creditors. For example, if a husband and wife own property as tenants by the entirety and the spouse with the debt passes away, creditors cannot request payment from the surviving spouse. Tenancy by the entirety means that each spouse owns 100% of the property and, therefore, it cannot be used to satisfy the debts of only one spouse and will automatically pass to the survivor when the first of them dies.
In most cases, the debts of only one spouse will not impact the assets of the other spouse. Therefore, if your spouse accrued credit card debt during their lifetime, only their assets will be available to satisfy that debt. However, in New York state, there are two exceptions to this general rule. The first is that the spouse accepted joint responsibility for the debt at some point. This is often seen on an admission agreement to a hospital or long-term care facility (which shouldn’t be signed without the guidance of an elder attorney). The second exception, which is often applied to medical debts, is called the “doctrine of necessaries,” which in essence means that married couples have a “joint obligation of support.” This means that debts accrued by one spouse for any of these necessities could become the responsibility of the other spouse after their death, and creditors may pursue payment from the assets of the surviving spouse if the estate of the deceased spouse is insufficient.
When dealing with the debts of an estate, it is important to have the guidance of an experienced estate attorney near you. To discuss your situation during a free and confidential consultation, please call us at 347-766-2685.
The Law Offices of Roman Aminov is an award winning probate attorney in New York City. Call us now at 347-766-2685 to discuss your options and prepare for legal needs.
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