If you have been named the executor of an estate, you have a lot on your plate. One of your biggest responsibilities is to settle the debts of the estate. All of these debts must be paid before any of the heirs can receive their inheritances. You may feel pretty overwhelmed right now, but it’s important to just everything one step at a time. Estate planning lawyers provide a guide on paying off the debts of an estate.
How Do You Begin?
After a person dies, they may still have several bills under their name. Many of these bills have to be paid off as quickly as possible. If there’s no executor appointed yet, the beneficiaries should start paying off bills like car payments, utility bills, mortgage and real estate taxes. If these expenses aren’t paid in a timely fashion, property may be lost or damaged.
How Do You Deal With Bills from Creditors?
If the estate must go through probate, the executor is required to post a notice of the proceeding in a local newspaper. After the notice is posted, creditors typically have between four and six months to submit claims against the estate. If they fail to submit their claims in that timeframe, they won’t receive payment.
If the estate doesn’t contain many liquid assets, the executor may have to sell the deceased’s assets to get money for the bills. However, you have to be careful not to sell too many of the assets. If some of the assets were left specifically to certain beneficiaries, it wouldn’t be fair to sell them for cash.
What If the Estate is Insolvent?
Although rare, sometimes the owner of an estate dies with more debt than assets. This makes the estate insolvent. If this occurs, the beneficiaries won’t get their inheritances, but won’t be responsible for paying off debts either. Claims filed within six months of the estate being opened are typically paid in order of priority. In general, attorney, fiduciary and estate taxes are paid first. If the deceased’s family was dependant on them for living expenses, they will get a family allowance. Then federal taxes, medical bills and property taxes will be paid.
Do Family Members Ever Have to Pay Debts?
The only way family members would be legally responsible for the deceased’s debts is if they co-signed a loan for them. For example, if you co-signed a car loan for the deceased, you would be responsible for paying back that loan.
Hiring an Estate Planning Lawyer
Paying off the debts of an estate and other executor duties can be overwhelming. If you ever need assistance with anything during the probate process, don’t hesitate to consult with an estate planning lawyer. We know how confusing dealing with an estate can be and want to help simplify the process.