I am appointed executor for my mother's will. She may have a few thousand left if she lives that long, but all her accounts have all siblings listed as equal beneficiaries. So if there are outstanding bills, expenses, or debts, how do I take care of my legal obligation to pay those off if the financial institutions pay on death directly to the beneficiaries?
The question I would put to you is: are you currently the DPOA? If you are, you have the authority to move your moms money around, close old accounts, open new accounts, etc.
So, are you concerned about paying her bills after death, or NOT paying her bills after death?
If you are currently her DPOA and DON'T WANT to pay her creditors, leave the accounts as they are. Some folks, with legal or banking advice, have intentionally set up accounts this way to avoid probate and creditors.
If you WANT to pay her expenses at the end, you can open accounts that are not POD so that you DO have funds available to pay her debts and final expenses. These accounts can be opened with a joint owner , such as yourself, thus avoiding probate, but knowing that YOU as the executor or would distribute any remaining funds to the beneficiaries according to the terms of the will.
What happened in your case is actually the result of proper planning. By designating beneficiaries of each account, they avoid probate.
However, if you act as executor, you will have a personal responsibility to administer the estate properly. That is to say, if it is not done correctly, then you must pay from your personal funds. Therefore it might be a good idea to either get insurance, or retain an attorney who is licensed and insured.
Legal fees and expenses of administration are first priority claim, so it is paid before all others. In Pennsylvania, my state, the priority of claims is set forth in Section 3392 of Title 20 of our laws. Section 3162 of the Code provides that the executor must advertise the grant of letters and notify creditors to bring claims within one year. Also, although the accounts with beneficiaries passed outside probate, there may be Inheritance taxes due on them. It depends upon the state laws where you live. There may also be Medicaid claims due against the estate. As you can see, it can get complicated, but only for someone who has not done it many times before. I hope this information helps.
Theresa2: I have a pet peeve in this area of beneficiaries. They should be paid first. Most lawyers will not agree with me, but my lawyer does! POD in the Beneficiary Statements is helpful along with each beneficiary's name, S. S. number, and full address. No need for a birthdate, unless requested.
Here we go again: Trot on down to the Courthouse with the deceased last bills. The clerk will prepare a Notice to Debtors and Creditors. If a creditor does not respond within 90-120 days, then do not pay the bill!
My goal is to have my estate insolvent on the day of my death..
Setting up an estate account is simple. First you have to apply for an EIN for the estate. You can do this online. It is like getting a SSN. Then go to the bank with your letters testamentary and the death certificate and set up the account. Transfer the money into the account.
There is one thing to consider -- If any accounts have another name on it, and if so are the accounts payable on death (POD). If someone else has a name on an account, they can write checks or draw money from it without going through probate, BUT there can be tax implications. Ask the attorney who is handling your probate what would be the best way to handle these types of accounts to avoid tax problems. (I don't know the answer myself.)