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So if the phone rings and collections for the hospital wants to know when Mr. James Doe is going to pay his bill, you politely inform him that he has died insolvent (penniless, broke, etc..). They can of course go after the estate, but based on your description, the estate has $0, so their debt is unrecoverable and they will charge it off and take the loss.
I recently read a thread around here somewhere (I think in Personal Finance) where someone was getting exactly that treatment from a business that the deceased owed money to. The business was threatening to take the relative to a collection agency and ruin her credit. It sounded like harassment and an awful situation.
I recently read a thread around here somewhere (I think in Personal Finance) where someone was getting exactly that treatment from a business that the deceased owed money to. The business was threatening to take the relative to a collection agency and ruin her credit. It sounded like harassment and an awful situation.
I've not heard of a business threatening a relative but I have heard of very sleazy "Don't you want to make sure your relative's business is settled? Wouldn't your father want you to pay his debts and keep his good name?"
Very sketchy tactics. And of course, the prime targets are grieving, and many of them probably don't know that you can't inherit debt...
Sleazy.
Of course, as I said, if the estate has assets, you of course have to use those assets to settle the debt. But often they are going after relatives specifically because the estate was insolvent, and has no money to go after.
Was he a veteran? There are VA burial benefits including a headstone.
Social Security pays a modest death benefit.
The life insurance will go to whomever was set up as beneficiary in the beginning...unless he changed beneficiary(ies) later on.
So if a wife now deceased was named beneficiary, the insurance proceeds would go to her estate necessitating reopening it...then proceeds distributed as her estate dictated. Which could be back to her husband if he was her sole heir & that would mean insurance proceeds go directly into his estate.
Last edited by historyfan; 02-02-2017 at 11:49 AM..
Reason: edit
Was he a Veteran? if so he can be buried in any National Cemetery that has room and that includes the space, the internment and the stone or marker depending on the Cemetery. They do not provide a casket.
You will need a copy of the DD214 which you better find in advance and he must have been HONORABLY discharged.
So very sad. Surely one of the children will step up to the plate and do the right thing. No?
Did you ever see Gosford Park?
My life is becoming that movie. To clarify, my wife and I are expected to be the financial salvation for the entire lot of deadbeats, and all of them hate us because they need our help. We are having less and less contact with the family members because of this - and that suits us just fine. (None of the sleazy stuff from the movie applies)
The old slogan definitely applies: "Failing to Plan is Planning to Fail".
A hypothetical request to a close to home situation.
A person dies with no financial assets, a small life insurance policy, and a string of debts. Will the family have access to the life insurance proceeds to pay for most of a modest funeral? Or must the debts be paid first?
Clarification details:
No house, but a 30 year old mobile home. Furniture is what was sold with the mobile home at time of its purchase. Mobile home is in a park with monthly lot rental fees. No antiques or collectibles of value. No automobile. No savings account. Checking account has a balance near zero at the end of every month. Life Insurance policy is likely $10K or less. No cemetery plot or headstone or pre-paid funeral plan. Life long refusal to consider cremation. No spouse or dependent children. Known debts currently include hospital, doctors, and utility company. No idea who else may have claims, the IRS was on this list until just this month! Five adult children, three of whom are broke themselves.
Thanks,
Is your hypothetical deceased a US military veteran (not necessarily retired, just a veteran) ?
If so, they are entitled to free burial & headstone in any one of 135 VA National cemeteries. Still some possible funeral home expenses, etc.
Only documentation required is discharge papers called Form DD-214.
I've not heard of a business threatening a relative but I have heard of very sleazy "Don't you want to make sure your relative's business is settled? Wouldn't your father want you to pay his debts and keep his good name?"
Very sketchy tactics. And of course, the prime targets are grieving, and many of them probably don't know that you can't inherit debt...
Sleazy.
Of course, as I said, if the estate has assets, you of course have to use those assets to settle the debt. But often they are going after relatives specifically because the estate was insolvent, and has no money to go after.
In some states (not mine) the surviving spouse IS responsible for debts the deceased incurred for medical care.
A hypothetical request to a close to home situation.
A person dies with no financial assets, a small life insurance policy, and a string of debts. Will the family have access to the life insurance proceeds to pay for most of a modest funeral? Or must the debts be paid first?
Clarification details:
No house, but a 30 year old mobile home. Furniture is what was sold with the mobile home at time of its purchase. Mobile home is in a park with monthly lot rental fees. No antiques or collectibles of value. No automobile. No savings account. Checking account has a balance near zero at the end of every month. Life Insurance policy is likely $10K or less. No cemetery plot or headstone or pre-paid funeral plan. Life long refusal to consider cremation. No spouse or dependent children. Known debts currently include hospital, doctors, and utility company. No idea who else may have claims, the IRS was on this list until just this month! Five adult children, three of whom are broke themselves.
Thanks,
When my MIL was first in a nursing home following a hospitalization payer source during that time was Medicare A which we knew she would eventually transition to long term Medicaid status which would happen quickly because the only asset she had was a small life insurance policy purchased many years ago to cover funeral expenses. Despite that the intent of that policy was to cover funeral expenses, it was a whole life policy with a cash value, so once she entered the Medicaid application process the state could lay claim to it, or if she died during that process creditors could lay claim to it. On the advise of his lawyer my husband had my MIL sign ownership of that policy over to the funeral home as a pre payment of funeral expenses. You may want to contact the funeral home that will be used to handle your family member's funeral arrangement to discuss if signing over their policy now is a possible option. The value of their insurance policy may not cover all the funeral expenses but what it does will at least take some expense burden off the family.
Thanks again for everyone's suggestions and knowledge. No Veterans benefits are available (no military service), and no surviving spouse. Great to know about transferring life insurance policies as pre-payment for funeral expenses, but since this policy is 'owned' by the former employer and has no cash value component I don't think I can apply this knowledge in this case. We do have another nearly penniless relative for which this feature might apply, so thanks for suggesting this.
Why don't people plan better for their own futures? All these relatives have/had well paying jobs, were licensed professionals, or had advanced degrees. They all had the same opportunities as my wife and I, yet for some reason squandered everything. I fear this situation is far more widespread than anyone realizes.
Both Dale Carnegie and Red Cross Lifesaving state that a person can only do so much to save another. Crossing that line will result in the death or destruction of the person attempting to help, but that doesn't stop the guilt.
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