An executor for a Brooklyn estate recently told me he received three shoeboxes filled with his late father’s mail. Inside was a chaotic mix of doctor’s statements, Medicare summaries, and what looked like final bills from a hospital stay. His question was simple: “What do I do with all of this? What can I throw away?” It’s a question my firm hears often, and the answer isn’t about simple record-keeping—it’s about an executor’s fundamental legal duty.
When you agree to serve as an executor, you take on a fiduciary duty to manage the deceased’s affairs with prudence and care. A core part of that duty is to identify all the estate’s assets and, just as importantly, all its legitimate debts. Medical bills often represent the most significant and confusing category of debt, and mishandling them can expose an executor to personal liability.
The Executor’s Role in Validating Estate Debts
Before any beneficiary receives a dollar, the executor must settle the decedent’s final affairs. This includes filing final tax returns and paying valid creditor claims. Those shoeboxes of paper are not just clutter; they are a collection of potential claims against the estate. Your job is not to simply pay every bill that arrives in the mail. It is to verify each one.
Was the service actually provided? Was it covered by insurance or Medicare? Has the insurer already paid its share? Often, what looks like a bill is actually an Explanation of Benefits (EOB) from an insurance company, which is not a demand for payment. Other times, a bill is sent in error or for an inflated amount. As executor, you must act as a prudent steward of the estate’s assets—that means investigating these claims, requesting detailed statements, and challenging anything that seems incorrect. Paying an invalid claim is a breach of your duty to the beneficiaries.
This process is formally overseen by the New York Surrogate’s Court. The court requires a diligent accounting of how you managed the estate’s funds, and that includes a clear record of which debts were paid and why. Simply throwing these documents away is not an option.
How Long Is Long Enough? A Timeline for Retention
There is no single, simple answer to how long you must keep these records. The timeline depends on several legal and financial clocks that are ticking simultaneously. The common advice to “keep everything for seven years” is a blunt instrument that often comes from federal tax guidelines, but an executor’s responsibilities are more nuanced.
First, consider the state-level creditor claim period. Under New York’s Surrogate’s Court Procedure Act (SCPA) § 1802, creditors have seven months from the date the court officially appoints you as executor to formally present their claims against the estate. This is a critical window. You should hold all medical records for at least this period and until all known claims are fully resolved. If a claim is disputed, you will need the records for any court proceedings.
Second, think about taxes. The IRS generally has three years from the date a tax return is filed to initiate an audit. The decedent’s medical expenses can be a significant deduction, either on their final personal income tax return (Form 1040) or on the estate’s tax return (Form 706), if applicable. You cannot deduct them on both. Whichever return claims the deduction, you must keep the supporting bills and proof of payment for at least three years post-filing. In some cases of suspected fraud or substantial under-reporting, the IRS look-back period can be longer, so keeping these records for seven years remains a prudent outer-limit guideline for tax purposes.
A System for Managing Medical Paperwork
My advice to the executor with the shoeboxes was to stop and create a system. Stewardship. It begins with organization. The first step is to sort the documents into three categories:
- Explanations of Benefits (EOBs): These documents from Medicare or private insurers are not bills. They show what was billed by a provider and what the insurer paid. They are essential for cross-referencing against actual invoices.
- Invoices and Bills: These are direct demands for payment from hospitals, doctors, labs, and other providers. These are the potential claims against the estate.
- Proof of Payment: This includes canceled checks, bank statements, or receipts showing which bills were paid by the decedent before their death.
Once sorted, create a simple ledger. For each provider, list the dates of service, the amounts billed, the amounts paid by insurance, and any amounts paid by the decedent. This document gives you a clear picture of what might still be owed. With this inventory, you can confidently communicate with providers, request clarifications, and make payments from estate funds for legitimate, outstanding debts. It transforms a chaotic pile of paper into a clear record of your fiduciary actions.
This organized file should be maintained until the estate is formally closed by the Surrogate’s Court and all tax-related audit periods have passed. At that point, you have fulfilled your duty.
If you are serving as an executor and are facing a disorganized financial record for a loved one, the first prudent step is to get organized. If the volume of paperwork or the complexity of the claims feels overwhelming, consider scheduling an executor’s consultation. An executor’s consultation is designed to establish a clear inventory of estate assets and liabilities, allowing you to meet your obligations with confidence.
