Brenner answers questions about all aspects of family finance.
My elderly mother has added me to her checking account. If she should suddenly pass away, can I keep writing checks on this joint account to pay her outstanding debts?
Yes, but you shouldn't. Her debts must be paid by her estate -- i.e., from accounts in her sole name. At her death, the joint account automatically becomes yours. "You shouldn't pay her debts from that account unless there isn't enough money in the estate to cover them," says Eric Kramer, a Uniondale estate lawyer.
An executor should learn about all the decedent's outstanding debts before paying any bills because if there's not enough money to go around, the law says some creditors are more important than others. Funeral and legal expenses and unpaid taxes have first priority. Secured creditors like mortgage holders come next; and unsecured creditors like credit card issuers come last. If the estate can't cover everything, creditors can assert their claims against some jointly held assets and accounts that go to named beneficiaries -- but with important exceptions.
A house jointly owned by a married couple can't be touched by the deceased spouse's creditors. The decedent's life insurance policies and retirement accounts with named beneficiaries are off limits to most creditors, too.
However, the government can access retirement accounts to collect a decedent's unpaid taxes. And a surviving spouse has a potential claim on any assets in the estate. The reason: In New York State, your surviving spouse is entitled to claim $50,000 or one-third of your estate, whichever is greater. A surviving spouse can exercise this legal right even against a life insurance policy or a retirement account on which you named another beneficiary.
The bottom line. Surviving family members are not legally responsible for paying a decedent's debts. They must be paid by the decedent's estate.