Paying the bills is never the best part of the day. Paying the bills of a loved one who has passed away is probably the last thing you’ll be wanting to do during this time. Whether it’s medical or credit, the bills must be paid. Unfortunately the credit collectors aren’t too sensitive when it comes to payments. It’s necessary to determine who is paying the bills, how much will be paid, and where the money will come from.

The answer depends on whether the estate of the decedent is solvent or insolvent.

A Solvent Estate

A solvent estate is one that has enough assets to pay off the decedent’s bills. In other words, when added up, the value of all of the decedent’s individual assets exceeds the amount of bills owed. If the estate is solvent, then the Personal Representative of the decedent’s estate will be responsible for paying all of the bills from the assets owned by the estate.

An Insolvent Estate

An insolvent estate is one that doesn’t have enough assets to pay off all of the decedent’s bills. In other words, when added up, the value of all of the decedent’s individual assets is equal to or less than the amount of bills owed. If the estate is insolvent, then the Personal Representative will need to prioritize payment of the bills as provided by federal law and the laws of the state where the decedent died. Unfortunately, in an insolvent estate the decedent’s beneficiaries named in his or her estate plan, or the heirs at law if the decedent didn’t have an estate plan, will get nothing. Fortunately the beneficiaries or heirs at law won’t be responsible for paying off the balance of the decedent’s unpaid debts (unless the beneficiary or heir at law was a co-signer, co-guarantor or in a joint bank account on the debt) – the companies that weren’t paid in full will simply have to write off the bad debt.