Death and late payment fees

[Stephen Tashiro]

Credit cards, phone companies, utilities etc. charge a "late payment fee". So when a person dies and their bank accounts are frozen, is their estate usually responsible for paying the late payment fees that result ? For example, companies that had an arrangement to automatically debit a bank account would no longer be paid. Checks that are still outstanding wouldn't be honored - would that trigger "bad check" fees ?

[glenn bradley]

I'm not the one to talk to and have no dog in this fight but, why would you let your accounts be frozen? Your "estate" should be arranged so that it immediately and automatically passes to your inheritors with as little fanfare and as much tax protection as possible. Consult an estate planner (a lawyer, I never thought I would advise someone to seek out a . . . lawyer) in your area; a will is only part of the picture. Ask anyone who has lost someone and was responsible for settling the estate; it is money well spent.

[Wade Lippman]

My MIL died last year. She had a few joint checking accounts with my wife and BIL. Nothing was frozen. He continued to pay her bills. No problem. YMMV

[Jerome Stanek]

Usually the executor has the power to pay bills that come in

[Brian Elfert]

I've heard quite often about banks freezing even joint accounts upon death, but it may be something that happened only in the old days. My father set my mother up with her own savings account many years ago in case he should die before her. He had heard about banks freezing accounts upon death and wanted to be sure she had access to enough money to pay the bills for at least a month.

[Tom M King]

The executor needs to "qualify" (Google it for the correct county) with the Clerk of Court as soon as possible, and after that, the executor can carry on business as usual. The bank will probably need a copy from the executor. The Clerk of Court will tell the executor what he/she needs to do. The Executor needs to check in with the county's Commissioner of Accounts as soon as possible after qualifying too.

[Lee Schierer]

I just went through this with my mother's estate. In PA, joint accounts are not frozen. Individual ones are. Most companies will waive late fees if you identify yourself as the Executor. If there is a will you have to register it with the County where the deceased lived and you also get sworn in as Executor there. There are fees involved. The Executor is responsible for paying all debts and carrying out the provisions of the will. Problems arise when there isn't enough money to pay the estate bills. Wills get satisfied from the top down and paid for from the bottom up if there isn't enough money in the bank accounts. The Estate has to set up an Estate account. You have to provide copies of your Executor appointment letter and death certificate to almost everyone (insurance companies, telephone, power, gas, bank, etc.). If there is a safe deposit box, one family member in company of a bank official can look for a will in the box but cannot remove anything from it. Once the Executor is sworn in the Executor and a bank official must inventory the box. The Executor has to file estate tax returns and Personal tax returns for for the deceased for the Federal, State and Local taxes returns. The executor disposes of all property in accordance with the will. My mother's estate was relatively small and it took 4-5 months of intense work and then we had to wait a full year for any "unknown creditors" to make a claim. I'm now trying to close out the account and it looks like it will take place maybe in April, 16 months after my mother's death.

Insurance companies with the exception of USAA were all a pain to work with. Two of the ones I worked with messed things up more than once and one even blamed me for their issuing duplicate checks because when I had called in to report the death, their representative told me about some missing dividend checks and started efforts to replace them and then when he sent the life insurance claim forms I also filled in on their form that there were missing dividend checks. I even told them in a letter that went with the claim form who I had spoken with and what he told me to do. USAA put the total cash value of the life insurance policy in an interest bearing account upon notification of death and paid out the accumulated interest with the beneficiary checks, none of the other well known companies did that even though the kept the money for several months after being notified.

[Stephen Tashiro]

I just went through this with my mother's estate. In PA, joint accounts are not frozen. Individual ones are..

That has been my experience in NM. Individual accounts are frozen as soon as the bank becomes aware the owner is dead. The banks don't depend on relatives or the general public to notify them of the death of an account holder. They have quicker ways of finding out - perhaps from the Social Security Administration ?

If A and B have a joint account and A dies then will the bank honor checks to the joint account signed by A that were signed before A died and presented afterwards ?

It is (I think) simple for people who have been declared as beneficiaries to an individual account to obtain the funds in the account, but don't think they become the new owners of the account. A company that was debiting the individual account would find that account frozen after the owner died.

[Tom M King]

Was an Executor designated in the will? If so, there should be no such problems in the transition. There is no good reason for the Executor to delay the qualification process (edited to add: past the first five days following death in NM). The Executor is the one who transfers money out of accounts to the beneficiaries. Google can find anything you need to know about it in NM. I just did a couple of searches, and it's all laid out clearly. I've been an Executor several times, and never had a bank to dishonor checks written by the deceased.

It's really gotten so much easier since there are not death taxes now like there used to be. I was an Executor for an Aunt with no children. She chose the misfortunate time to die when there were high Estate Taxes. Most of her assets were in land. The value of the land was high enough that she owed a LOT of death tax. I had to develop some of the property and sell it to pay the taxes. It took several years. I haven't run into anything like that since the rates have gone to nothing.

I don't know what county is involved here, but Google can find it, such as: http://www.bernco.gov/probate-court/welcome-to-the-court.aspx

[Bruce Wrenn]

Lucky me, I doing this now. My sister died on Feb 5th. She had a will, and named me executor. She was in a care facility, and had a trust account, into which was deposited her SS checks and any other funds (gifts.) On the 8th, three days after her death, facility paid themselves for partial month, and insurance premiums. So Monday (minimum of 30 days after her death), I get to go over and stand on their desk and read the riot act to them. Taking a copy of courts instructions for settling her final expenses. Care facility is in 8th position to be paid- good luck! Personal contracts (credit cards) are only for a person's lifetime. If their is any money left over after the estate has been settled, then they get paid. But they will call you and say "You know Aunt Martha would want you to pay these." YEAH-RIGHT!

[Ken Fitzgerald]

It helps if before the death occurs, the one who's dying identifies the executor to the banks, credit unions and insurance companies. My MIL did and my wife's oldest brother was identified as the "Executor". He paid all the bills following her death and distributed equally the small amount of inheritance.

[Stephen Tashiro]

Was an Executor designated in the will? If so, there should be no such problems in the transition. There is no good reason for the Executor to delay the qualification process (edited to add: past the first five days following death in NM).


However, the executor may be a relative who lives in a different state and must take time to settle some of their own affairs before travelling. Unless the executor is already paying the bills of the deceased, it will take time to figure out who actually sends the bills and who is automatically debiting bank accounts and credit cards - or even the what credit cards the deceased had.

(Fortunately, in the situation that I'm thinking about, the bills and credit cards are well known.)

If the circumstances surrounding the death (e.g. traffic accident ) require that the state do an autopsy before issuing a death certificate, the certificate (in NM) might not be issued until 3 or 4 weeks after the death. I wonder if this would delay the executor being recognized.

[Lee Schierer]

When I opened the Estate account, on the advice of my attorney, I asked for the previous two years of bank records for my mother. The Bank provided them without any problem. This allowed me to determine who the potential creditors were. Most businesses and credit companies have experience with account holders dying and will readily forgive late charges that accrued after the date of death. Although the survivors may feel an obligation to pay credit card debts, they do fall pretty far down on the list of who gets money from an estate as the estate is settled.

[Stephen Tashiro]

Although the survivors may feel an obligation to pay credit card debts, they do fall pretty far down on the list of who gets money from an estate as the estate is settled.

That raises an interesting question about what an "estate" is. In the case I'm thinking about, the liquid assets like bank accounts have declared beneficiaries. There might not be enough cash to pay off all debts if the beneficiaries have more claim to those assets than debtors. So, do bank accounts with declared beneficiaries not become part of the deceased's "estate" ?

Also, in this case, there would be enough value in material goods (antiques, property, paintings etc.) to pay off all debts if these assets were sold. So is the executor required to liquidate enough of this type of asset to pay off all debts - including the credit card debts ? Or can he leave a credit card debt unpaid and follow the deceased's directive to give the house and the antique chest of drawers to aunt Sally ?

[Scott Donley]

The executor's job is to get the most he can for all assets, pay the bills, then distribute the balance of the inheritance. Not always that easy.

[Tom M King]

Thankfully, I have never run into this. This gives some explanation: http://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter1-1.html

This copied and pasted paragraph shows that it probably needs to be looked into further, or maybe consequences later:

You can’t shortchange creditors or your family with a POD account—avoiding probate doesn’t mean avoiding your legal obligations. So if you don't leave enough other assets to pay your debts and taxes or to support your spouse and minor children temporarily, a POD bank account (or any other asset that passes outside probate) may be subject to the claims of creditors or your family.

[James Tibbetts]

You really need to research this in the specific state of residence of the deceased. Laws will vary from state to state, some times greatly. If an executor is pre-named and qualified to the local jurisdiction then they are in place at the time of death. Cause of death is irrelevant for this issue. Notice will have to be provided to the appropriate court agency. As far as late fees and such, contact the creditors. We had to do this recently with the loss of my mother. All the utilities and other creditors were very cooperative in noting the accounts for a possible delay in payments without service fees. See your local registrar of wills if that is the right agency. I've found them to be extremely helpful and you get the right answer the first time.

[Stan Calow]

Death does not relieve one from debts. If it did, there'd never be a reason to pay off credit cards or loans: just keep refinancing until you die. Debts have to be paid. In my state, the probate court has to recognize you as the executor, which authorizes you to act. Then you advertise to give creditors the opportunity to ask for payment. Any non-jointly owned assets get liquidated and debts paid from that. Remainder goes to heirs with courts permission. Lots of opportunities for complications.

[Bruce Wrenn]

[QUOTE=Stephen Tashiro;2541287Or can he leave a credit card debt unpaid and follow the deceased's directive to give the house and the antique chest of drawers to aunt Sally ?[/QUOTE]Here that's the answer. The estate doesn't include things willed to others, only what is not accounted for in will. Usually bank accounts have a transfer upon death clause, which means they transfer upon death.