I’m managing an estate and received a bill. Should I pay it?
We get these types of questions from Personal Representatives a lot (called Executors in many other states).
While on the surface this seems like a simple question, in reality there is a lot of complexity involved in assessing whether a claim should be paid, and in what amount.
In South Carolina, there is a certain order that claims from creditors need to be paid in.
These are as follows:
(1) costs and expenses of administration, including attorney's fees, and reasonable funeral expenses;
(2) debts and taxes with preference under federal law;
(3) reasonable and necessary medical expenses, hospital expenses, and personal care expenses of the last illness of the decedent, including compensation of persons attending the decedent prior to death;
(4) debts and taxes with preference under other laws of this State, in the order of their priority, including medical assistance paid under Title XIX State Plan for Medical Assistance as provided for in Section 43-7-460;
(5) all other claims.
Aside from this, it is important to note that “no preference shall be given in the payment of any claim over any other claim of the same class, and a claim due and payable shall not be entitled to a preference over claims not due.” What this means is that if you have two claims of the same type as listed above, even if one was made six months prior than the other one, they have the same priority. So if the estate only had $100,000 and the first claim was for $60,000, which you paid, and then another claim came in for $50,000, you could be on the hook for the majority of the $10,000 the estate doesn’t have because those claims should have both been paid or, if there wasn’t enough money to pay both, paid proportionally.
In addition to the above, it is also very important to make sure that you are carefully reviewing the incoming claims and demanding additional documentation where appropriate. For instance, if a large medical bill is presented, you should be sure to request an itemized statement, review that statement, and confirm with the insurance company and doctor why certain items were not covered by insurance. By doing so, you may find miscoded items or find that insurance still needs to pay a large portion of the claim, all of which could save the estate significant funds.
Of course, I know many Personal Representatives are just too busy to handle all of this, which is when hiring an experienced attorney can make a huge difference. Our firm, for instance, can advise clients on when to pay creditors and in what amounts, and can even handle requesting and reviewing the documentation for you as part of our estate administration process.
If you or someone you know is handling an estate and either is confused about which claims to pay or needs help with the claims review process, please give us a call to set up a free initial consultation.