If my mother just passed and my father is getting alot of medical bills, does he have to pay them?

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If my mother just passed and my father is getting alot of medical bills, does he have to pay them?

They own a home together. He also is not sure if a retirement fund in both names or hers and he is beneficiary.

Asked on November 24, 2012 under Estate Planning, Nevada

Answers:

Victor Waid / Law Office of Victor Waid

Answered 8 years ago | Contributor

If there a lot of medical bills coming at him, he should consult a bankruptcy lawyer who may be able to work with the medical creditors and prepare a chapter 13 plan, whereby the house and the retirement plans are exempt from attachment and the bills are paid pennies on the dollar. Unfortunately, medical bills drive a lot of people into the bankruptcy court. Don't delay and don't pay any bills until you have good legal advice ;don't let the creditors push your father into payment, and when creditors call, tell him to tell the creditors to stop calling him or he will be filing a complaint with the FTC and or the attorney general for California.

Catherine Blackburn / Blackburn Law Firm

Answered 8 years ago | Contributor

Your question involves several different issues.  It is always difficult to sort through these things while grieving the loss of a loved one.

Your father probably is not responsible for your mother's medical bills, and bankruptcy is not the first place to look.  The first place to look is your mother's medical insurance or Medicare.  It takes time to sort through what the insurance paid, what the insurance should have paid, and how much your mother owed.  The amounts your mother legitimately owed should now be a part of her estate. 

The second place to look is within your mother's "estate."  If your mother and father owned a home together, that home should pass to your father automatically and outside the estate.  Your mother's health care providers should not be able to reach the home.  They could never reach the home in Florida.

The retirement funds should also pass outside your mother's estate.  Ordinarily, retirement funds are not held in joint names.  They do, however, have named beneficiaries, and federal law makes it very difficult to name anyone other than a spouse as the beneficiary.  I suspect the funds were held in either your mother's or your father's name with the other as beneficiary.  Your father should simply call the company that holds the retirement account and ask about it. 

If the retirement was held in your mother's name with your father as beneficiary, it will pass to him outside your mother's estate.  As beneficiary, your father will have options as to how he receives the retirement funds.  Watch out - if he takes them in a single, lump sum, federal income taxes will be due on the entire amount.  Under federal tax law, he has the option to convert the tax-deferred retirement account to his own name and take distributions according to his own choices.

After looking at medical insurance benefits, how the home passes, and how the retirement benefits pass, then your father can look at your mother's remaining assets.  She may or may not have sufficient assets remaining to pay the medical bills.  If she does have such assets, then the bills would ordinarily be paid from her estate.

Your father does not have a legal obligation to open an estate in order to pay your mother's medical bills.  The health care providers can open an estate if they want to "collect" the amounts not paid by insurance.  A probate and estate attorney can help your father with this issue.  If your mother had assets that require probating an estate, this lawyer can also help with distributing these assets.

Everyone should understand that medical bills are negotiable! Virtually no medical provider expects to receive the full amount billed. Governments do not pay the amount billed.  Insurance companies do not pay the amount billed.  Individuals should not pay the amount billed.  No matter how your mother's assets pass, in the end the medical bills are negotiable. 

Only after all attempts to negotiate medical bills fail would I recommend considering bankruptcy.  Bankruptcy brings all kinds of consequences with it (like credit issues, long-term payment issues, loss of assets, etc.).  It is sometimes necessary, but I consider it the last choice.

I suggest calling the retirement account company and seeking advice from a probate lawyer or two who will give a free consultation.  This should give your father a good idea of what steps to take.

Please accept my condolences for your loss.

 


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