6/20/2012 3:08 PM ET|
When your parents die broke
By law, the mother's estate was responsible for paying the money back -- except Michele's mother died in debt. Collectors went after her grandfather, but he was essentially broke, too. Dealing with the collectors took its toll on all concerned.
"I am not bitter about my mom anymore. . . . I am sure the stress from the debt caused her heart attack. However, I am the steward of my grandfather's money and care, so I need to manage this debt mess and continue paying his long term health facility," Michele wrote. "I am a little overwhelmed."
Her troubles may not be over when her grandfather dies. A growing and lucrative market for old debt has led some collection agencies to pursue credit card bills even after an insolvent person dies.
One of my readers told me a collection agency insisted he had a "moral obligation" to repay his father's debts. If this happens to you, take a moment to savor the irony of being lectured about morals by a clearly unethical collector. Then hang up.
However, secured debts -- loans that are attached to an asset such as a house or a car -- are a different story. Those payments must be made, or the lender can take the asset. If your folks had any equity in a home or car, finding the money to make the payments may need to be a priority.
(By the way, if a surviving spouse is still living in a home, some or all of the equity may be exempt from creditors' claims, depending on state law. Otherwise, the house may need to be sold to pay debts.)
Also, if you're executor -- the one in charge of settling the estate -- you have a responsibility to find and inventory all debts and assets. Tax forms, bank statements, credit card statements and checkbook entries can give you clues where to look.
Then you must notify creditors, banks, brokerage firms and others of the death. (Read "What to do when someone dies" for an overview. For a more complete list of an executor's duties, check out a primer such as "The Executor's Guide," another Nolo Press book, by attorney Mary Randolph.)
What you shouldn't do, Randolph said, is rush to pay off the bills until you have a solid idea of your parent's entire financial picture.
"A mistake people make is they pay off things too quickly," Randolph said. "A credit card bill comes in and they pay it, not realizing there won't be enough money in the estate to pay for (higher-priority bills) like funeral expenses or medical expenses."
Another mistake: counting on life insurance or retirement accounts to cover the debts. These assets typically have designated beneficiaries; if that's the case, the money goes directly to those people without passing through probate or other estate-settling processes.
The beneficiaries of these accounts "walk off into the sunset," said Pasadena, Calif., lawyer Ruth A. Phelps, a certified elder-law attorney and member of the National Academy of Elder Law Attorneys. "That money is not subject to creditors' claims."
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My step dad passed away this year, and he was 10 yrs younger than my mother. The hospital costs were more than a half million, as he was in the hospital two months. Thank God my mother had the sense to get excellent health insurance, because it is all paid. Now I think, if she has to have medical care, I am so grateful that she has the money saved and invested for that purpose. It's not my money, or money for the grandkids. When someone dies, the greed comes out!!
Parents give life to their kids and support and educate them, where does it say that the kids get what ever money is left over from the parents earnings. Turn 21, leave the house and go make your own money.
It is tough being old and not easy to keep up with inflation and medical expenses. Then there is the simple fact that many parents sacrificed a lot raising their kids and finally want to have some fun.
The biggest priority in every family is.............................paying off your home before you retire.....period.
Never take that second mortgage for anything................unless you want to DIE BROKE.
Here's a different spin, in your last days, prepay for your funeral/cremation, with a credit card. Since the credit card is unsecured debt, according to the aritcle, your heirs are not on the hook for this debt. Take all your money out of the bank, IRA's, 401K's and put it up. Leave a letter to the one you trust the most as to where you have hidden it. Put you car in one of your children's name if it is free and clear. Do the same with all your property , check and see what the statute of limitations are on the time limits to this.
Remember "you came into this world pennyless and naked, it you leave the same way, you broke even".
Stop thinking you are going to live forever, look at the "obits" in the paper every Sunday do the averages of all the ages, it will surprise you on how young people are passing a way.
Using this comment board to Advertise a dating website?.
If you are so lonely, go out and help someone else. There, you might find a partner or companion--Dating Sites are people who present themselves in a Fraudulent Bio.
Here's a template for a Last Will and Testament EVERY Boomer parent should use:
" Being of sound mind , I blew it all while I was alive "
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