Will the bill collectors come after Dad's estate?
My 82 year old father is on dialysis and hasn't paid his bills for years. The center continues to treat him, but he has had collection calls. He is determined to confound and confuse them for as long as possible. He has some money and owns his small home, but the bills would clean him out. I don't know how much he owes, but I think at least into the five digits. He is a veteran, but the veteran's center is farther away. He lives at home and is fairly self sufficient. If he were to die, would the collectors get first crack at whatever money or property he has? And would there be a way to protect his small estate?
Generally, If/when your father dies, his creditors would legally be entitled to collect what he owed them before any of his small estate could be passed to family members or other inheritors. The technicalities of how the creditors would collect depend on:
1) Whether your father left a will or not. If he left a will, there would normally be a probate court proceeding, where creditors can file claims. If he did not leave a will, there would normally be what is called an "intestate" court proceeding, where the creditors would also file their claims.
2) The law of the state where your father was living when he died; Many states' laws exempt small estates from regular probate proceedings. Each of these states sets a different dollar amount defining what a "small" estate is.
I do not know of any way to legally protect your father's estate from his creditors. From what you said, it's clear that he owes them money. He or you could consult an attorney in the state where your father lives to see if there's some way that his estate could be protected from his creditors. However, I think (but am not certain) that you'd probably end up paying a lawyer's fee without learning anything that would legally work.
After doing more research on the subject, I have found that, if you have minimal assets, the important thing to do is avoid probate. The only time creditors have a "shot" at the deceased assets is if the estate goes to probate court.
To avoid probate, make sure all bank accounts, 401k's, IRA's, investment accounts, insurance, etc, list a beneficiary that can transfer the assets of the deceased. Depending on your state, these assets typically avoid probate court entirely.
If the deceased owned a home, you can list a joint tenancy with right of survivorship. So my father could list me, as his son, as joint tenancy with right of survivorship on his mortgage. Basically I would automatically own the home upon my father's death.
Because I own it, the value of the home would not be available to creditors and would bypass probate court.
That pretty much covers it for me. I will hire an attorney to change the mortgage as described above and I will be good to go.
In my case, my Father has few assets anyway. Some states will not send to probate estates of low value. But it appears that protecting your estate is not that difficult - even if you have significant assets.
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