Do I have to pay my fathers’ or husbands’ bills from the life insurance?

I get phone calls from people asking about “pay on death” or “transfer on death” accounts.  Usually, a parent has died, and named one or more children as a beneficiary on a bank account or an investment account or life insurance.  The question is, does the child have to use that money to pay the bills of the parent?  The answer, usually, is “No”.  Under most circumstances, money passing outside of probate by POD or TOD or Beneficiary designation does not have to be used to pay creditors of the parent.  Likewise, to the extent that this money passes to a surviving spouse, it does not have to be used to pay bills of the person who died.  The major exception to this is where the money is being held at the same institution where the bill is owed; if First National Bank has a CD payable on death to a child or wife, and the person who died had a credit card at First National Bank, then the bank may be able to ‘set off’ the CD against the bill; to take the money and apply it to the bill and not give it to the child or the spouse.

A related matter is where the dead person owed medical or hospital bills and the hospital will try to get the surviving spouse to pay the bills, under a theory of “doctrine of necessities” or “doctrine of necessaries”.  Florida did  have a law on Doctrine of Necessities, but it was overturned by the Florida Supreme Court in  Connor v. Southwest Fla. Regional Med. Ctr., 668 So. 2d 175  (Fla 1995).  At this point about the only way that a hospital or doctor can force a surviving spouse to pay medical bills for a deceased spouse is if the surviving spouse signed a contract or otherwise agreed to do so, and did so in their own name, not as agent or health care surrogate for the deceased spouse; and Florida courts tend to be very rigid about this requirement.

If you have questions about  your probate rights as a surviving spouse or child in The Villages, Florida, feel free to contact my office.


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