What documents must be in place for handling a loved one's bills after death?

1 answer | Last updated: Sep 27, 2016
A fellow caregiver asked...

i understand that a power of attorney ends when a person dies. how does the person listed as power of attorney (access the person who died) their bank accounts in order to pay for furneal and other bills after the person has died. i need to know if these bills can be paid with the listed person as power of attorney after death. what document must be in place for dealing with bills after death.

Expert Answers

You are correct, a power of attorney ends with the death of the principal, the person who granted the power. Lacking that power, how can you pay the debts of a loved one, after her or his death?

Clearly, you want to pay for the loved one's debts, including his or her funeral costs, from the deceased finances, not your own. There are a couple of possible ways you can gain access to the deceased bank accounts. First, you can have a shared, joint account. Second, you can be named as beneficiary on a pay-on-death account.

To set up either type of account, the existing owner (the future "deceased") must be competent, and willing to do so. If the existing owner is no longer mentally competent, you might be able to set up one of these accounts if you have authority to act under a "durable" power of attorney, which remains effective even if the principal becomes incompetent. However, you could be exposed to risks if you set up either type of an account for an incompetent principal. The law of the state where the principal lives may not allow you to do this, because it is effectively arranging for the transfer of the principal's property after his or her death. Also, an agent under a durable power of attorney may not improperly benefit from the principal's assets. Making yourself beneficiary of the principal's bank accounts may, at the least, seem improper to any other inheritors or would-be beneficiaries of the principal's property. However, if all concerned understood that you would only obtain the principal's money to pay debts, not for your own personal benefit, there's less risk here. [But what happens if there's some bank account money left over after debts are paid? Who would get that money?]

If you cannot arrange to get access to the principal's bank accounts, you face a more difficult path. Probably you'd have to file a court probate proceeding,and get judicial authorization to be able to represent the deceased. Does that person (alive now) have a will? If so, are you named as executor?

If that person has a living trust, and named you as successor trustee, you could act as successor trustee to gain access to the trust assets. But this does not seem to me like an instance where the person has created a living trust.

Good luck