Q. When my partner died I discovered that he owed $75,000 in charge card bills and $110,000 in unpaid hospital bills. Everything that he owned (the house and the bank accounts) was held in joint tenancy with myself. He also had several life insurance policies and IRA accounts which named his children as beneficiaries of these accounts. Do I have to sell the house to pay my lover’s bills? Do his children have to use the money from the life insurance and IRA accounts to pay their father’s bills?
A. First, the law says that a person can’t transfer their property to defraud their creditors or get out of paying their bills. If, however, you and your partner owned the house and bank accounts in joint tenancy before the debts arose then that property will pass to you as the surviving joint tenant owner without deduction for payment of your lover’s bills.
Creditors of a deceased person may only go after property in the deceased person’s probate estate, which means property your partner owned in his name alone, and does not include joint tenancy property. Also benefits paid under a life insurance policy or IRA account with a named beneficiary is not considered part of someone’s probate estate and is not subject to the claims of creditors. Accordingly, the life insurance and IRA money would go to your partner’s children and would not have to be used to pay creditors.
If you and your lover have entered into a Civil Union, my answer would change depending upon the nature of the debt. Illinois Civil Union Couples would be subject to “Family Statutes” 750 ILCS 65/5 and 750 ILCS 65/15 (also known as the Family Expense Act). They provide that spouses (after a Civil Union your partner is now considered your spouse) are not generally liable for one another’s debt. The statute states also that your wages, earnings and separate property are not liable for the separate debts of your spouse. However, 65/15 does hold both spouses jointly and separately liable for the “expenses of the family.”
The law defines such “expenses” to include medical and funeral expenses, as well as many other services and goods that benefit the family. Therefore any medical bills, including those from a hospital, doctor, clinic, laboratory, etc. would be chargeable upon your property if the creditors look to you for payment.
This text is from the weekly ad of Roger V. McCaffrey-Boss & Associates. Contact info: 312-263-8800, 19 S. LaSalle, Suite 1500, Chicago, IL 60603; or rvmLawyer@aol.com.