Do we really need an estate or probate set up in this situation?

Please accept my condolences on your recent loss, that sounds like it was really an overwhelming situation. But when your family is ready to deal with things, there is no particular need in WA to set up a formal probate under these circumstances, and there is no reason to raise funds to pay for his debt. If he died owning very little (and without owning any real property), there are forms you can get on line at http://www.courts.wa.gov on the forms page for estates passing without probate. You don't need an EIN from the IRS unless you are setting up a formal probate. You need to notify DSHS's office of financial recovery, because if he really didn't have any assets, the hospital bills will be written off or reduced. And if you are contacted by some out-of-state law firm imploring you to do the right thing and pay his Visa bill, well, please talk to local counsel before doing that. Unsecured debts are not recoverable from estates where money needs to go to the funeral director and the hospital first. Secured debts are different. And no, gifts are not taxable income under $11K per year, and WA does not have an income tax anyway. But a half hour with a local probate attorney could save you a great deal of money. Again I am sorry to hear of your loss and I hope this helps. Elizabeth Powell

I would add only this clarification. You cannot set up an estate account unless an estate has been created. As you have correctly noted, there are not sufficient funds to warrant setting up an estate. There are two problems here: 1. If no one is a signer as a joint tenant with right of survivorship, or a designated beneficiary on the accounts owned by the decedent, then the only feasible way to access those funds is by use of a Small Estate Affidavit. However, that process requires that adequate provision be made for payment of all of the decedent's debts - - - which I doubt you can claim. So if you cannot use the Small Estate Affidavit procedure, and if no one can access the funds some other way, then you will probably have to wait several years for the bank or other holder of the assets to transfer the assets as unclaimed property to the State of Washington, Department of Revenue. At that time, the persons entitled to the assets can probably claim to recover the assets from the Department. Keep watching the notices published in the newspaper for the decedent's name to be published under the city of his residence. 2. The second problem is how to handle the "donations" for payment of the medical and burial expenses. People can give money to whoever they want. If the amount given is less than $13,000 in any particular year, there is no reporting required and no tax consequence either to the person who made the gift or the person who received the gift. As Elizabeth has correctly noted, the receipt of a gift is not taxable income for Federal income tax purposes. These gifts are not eligible as a charitable contribution because the recipient of the gift is not a charity qualified as such under the rules of the IRS. So the donor will not receive a tax deduction for the gifts. The person who receives the "gifts" can use the funds for any purpose whatsoever. I would suggest that any funds received be used to reimburse the funeral and burial expenses first because those providers will not likely take any action without someone guaranteeing that they will be paid - - - probably by getting a credit card charge. The medical expenses will probably largely be covered by insurance, or Medicare, or Medicaid. Any unpaid balance will likely be "written off" by the medical provider because it is infeasible to pursue a claim against the decedent. No one should offer or agree to be responsible for any debts of the decedent. He (or more properly, his estate) is responsible for his own debts. If the assets are insufficient, or not available in a practical sense, then that is just too bad for the creditors. Good luck. Dan Kellogg Renton and Kent, WA