Estate Laws on Parents' Medical Bills in Illinois

When your parents die, they may leave behind unpaid medical bills. In Illinois, the deceased parent’s estate is generally responsible for paying off those liabilities. The parent’s probate estate is composed of the assets she solely owned at the end of her life, such as real estate titled in her name or personal financial accounts. However, there are circumstances under Illinois law where people, and not just the estate, have a financial responsibility to pay the outstanding medical liabilities.

Some estates’ assets are insufficient to cover the decedent’s debts. In that case, Illinois has a system that groups the debts into certain classes. The debts are then paid off by group. Only when a group of debts are entirely paid off can an estate pay the next group of debts. In Illinois, medical expenses are the last debts to be paid for by the estate. Funeral expenses, back taxes and fees, funds due to employees, and awards to your parent’s surviving spouse and to her children are all paid by the estate prior to it settling medical expenses.

If your deceased parent’s spouse survives, he is personally responsible for the deceased’s medical debts. Under the Family Expense Act, spouses are both responsible for the family expenses that either one incurs. What constitutes a “family expense” has been debated in Illinois courts. However, it is widely agreed that medical expenses of either spouse constitutes a family expense and therefore both spouses are liable.

While the Illinois Family Expense Act makes spouses liable for each other’s medical expenses, it does not make children liable for their parent’s medical expenses. Children may generally be liable for their parent’s medical expenses only if they promised to pay the debt as a co-signer. To qualify as a co-signer, the child must sign the relevant medical billing forms as well as an “Explanation of Guarantor’s Obligation.”

As part of their estate planning, many parents place property in a trust as a means to ensure that their assets are quickly distributed to their children when they pass on. In Illinois, trust assets are excluded from the decedent’s probate estate. When the decedent dies, all assets in the trust she created are protected from the decedent’s creditors, including a hospital or doctor. They cannot sue to obtain the trust assets to settle what is owed.

If your parent gave you valuable property shortly before her death, and her estate cannot pay its medical debts, the doctor or hospital may sue. These creditors can claim that the transfer was fraudulent. If the parent made the transfer with the intent to defraud her creditors or with the knowledge that she lacked the resources to pay off her debts, under Illinois law a court could invalidate the transfer with the property going back to the parent’s estate. That property would then be used to pay off any remaining debts. As a result, creditors may scrutinize property transfers to children that happened immediately prior to the parent’s death.