Many people do not realize this, but the federal government requires states to attempt to recover the costs of Medicaid coverage from the estates of some of those it covers. The criteria vary from state to state, but it is important to be aware of them if your loved one was receiving Medicaid. In general, states can only make claims against the estates of those who were over 55 and in long-term care. Some states use a narrow definition of the estate to claim Medicaid recovery, but others expand it to include many non-probate assets. States cannot make claims against a spouse for Medicaid recovery during the spouse's lifetime, but after they pass away, they can claim repayment from the heirs for the original spouse's Medicaid bills.

A guide to Medicaid estate recovery

Among the items a loved one leaves behind after their passing, there is usually some debt as well. As the executor of your loved one's estate, you will need to track down and determine which debts they owed and to whom. If your loved one left a will, a list of these debts is often kept with this important document. If not, there are a few sources that will need to be checked, among them your loved one's personal papers and digital files. If you still are not sure where your loved one may have debt owed, you will find the debts when you get your loved one's credit report, or later when you post a notice to creditors.

Finding all your loved one’s debts

If your loved one left debts behind, these will be paid out of their estate, not your pocket. But that may not stop creditors from trying to intimidate you into paying. You should know how to defend yourself against these illegal deceptive practices. Collection agents are only allowed to call the executor or adminstrator of the estate, or the spouse of the person who has died, and then only to talk about the debt and how it will be paid off in probate. Calling more than once, or calling anyone else, is illegal. As is lying in any way about the debt.

Know your rights: Unsecured debts and illegal collection

Among all the things a loved one leaves behind, there are almost always some debts. Settling these debts is a key part of dealing with their estate. Although you most likely won't be paying your loved one's debt out of your own pocket, you will need to understand the two different types of debt owed, i.e. secured and unsecured debts, and how to prioritize them. If your loved one's estate has more debts than assets, it is considered an insolvent estate and it is important to know how to navigate this.

Prioritizing debts for insolvent estates

No matter what resources your loved one had, chances are they still owed some debts when they passed away, be it the mortgage on their home, a credit card balance, or an unpaid utility bill. It is helpful to know at the outset that, in almost all cases, neither you nor any of your loved one's other beneficiaries or heirs will be held personally responsible for the bills and debts that your loved one left behind. However, there are some rare exceptions of which you should be aware.


Who pays the bills after someone dies?

At a time when you most need a bit of peace of mind, debt can invade your worries. Especially if creditors are hounding you for repayment. They don’t generally have a (legal) leg to stand on: Once a probate court sorts out creditors’ claims, they cannot come after your own money to satisfy any unpaid debts. However, there are some exceptions that could mean you’re on the hook for paying back at least some of your loved one’s debts. 

Can I inherit my loved one’s debt?

For the purposes of an estate, how do we define debts? What are all of the things that make up the estate's debts, and more importantly, what does not count as a debt? There are several kinds of debts your loved one may have incurred, and most are owed by the estate. There are, however, a few kinds of debt that the estate does not owe or can avoid.

What is considered debt?

Most of your loved one's debts belongs solely to the estate—there are only a few exceptions to this, including debt acquired during marriage in a community property state or co-signed debt. The Medicaid Estate Recovery Program applies to certain elder care expenses and may have to be repaid like a loan. It is important to know what debt needs to be paid and what debt should be put off for now or might eventually be forgiven (secured debt is typically not forgiven, but sometimes unsecured debt is), especially when creditors start pursuing repayment. Companies that have no legal rights to be paid may still try to aggressively pursue repayment. 

Can my loved one’s debts be forgiven?

If your husband or wife passed away and left some debts behind, you may be concerned about whether you need to pay these back. In most cases, you can rest assured that your spouse's estate will pay, not you. There are, however, a few notable exceptions. Community property laws in 9 states mean that any debts incurred during the marriage must be paid from your shared assets. The same goes for joint debts such as co-signed loans or joint credit cards, in any state. Mortgages can generally be taken over. Medical debt is a special case, and different states treat it differently.

Are spouses held responsible for debts?

When you’re grieving the loss of a loved one, the last thing you may want to think about is bills. Luckily, not all charges need to be tackled at once. The key to getting through this task involves prioritizing what is most important, and taking care of yourself throughout the process.

Paying a loved one’s bills

What to do with your loved one’s leased car

Can someone inherit a loved one’s debt?

After a loved one passes away, their family may incur many expenses before probate starts. Some of these can be reimbursed by the estate, but it is important to know which. Reasonable funeral expenses are covered, but some specific things like headstones are not. The costs paid while administering the estate will also be paid out of its assets. These include everything from legal fees to the cost of selling the house.

Bills & Debt

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