If you have been appointed the executor or administrator of a loved ones estate, you are in a position of honor and responsibility. One of the responsibilities youll encounter as you fulfill your duties is that of identifying, categorizing, and paying the debts of the estate.
Listing the Debts
Depending on the size of the estate, the decedents financial situation, and his or her level of organization, this could be a relatively simple task, or it could be quite a challenge. When it comes to listing the debts of the estate, what exactly are you looking for? Heres an overview:
Loans: these include mortgages, lines of credit, car loans, student loans and other personal loans. Youll want to gather any notes, credit agreements or other documents that show proof of the loans, as well as any bills or records showing the remaining balance for each loan.
Credit Card Debt: youll list each credit card for which the decedent carried a balance. Youll want to gather credit card agreements and any bills showing recent balances.
Final Medical Bills
Funeral and Burial Bills
Utility Bills
Taxes: including property taxes, and federal or state income taxes youll want to gather the decedents income tax bills for the preceding three years, if possible.
Cell Phone Bills
Homeowners Association or Condominium Association fees
Storage Fees
Categorizing the Debts
Your probate attorney will help you identify the necessary bills and debts, and once youve listed each liability, youll categorize the debts.
The decedents liabilities are split into two categories: continuing expenses and final bills.
Continuing expenses are things like mortgages, homeowners association and condominium association fees, utility bills, and other expenses that will continue throughout the probate process and beyond.
Final bills include those debts that can be paid off by the estate as part of the probate process. These include items such as credit card bills, medical and funeral bills, personal loans, and taxes.
Paying the Debts
Assuming that the estate has enough assets to cover these final bills, you will ultimately be responsible for paying them using those assets.
If the estate does not have enough assets to pay all of the decedents final bills, then the probate attorney will help you prioritize the bills in accordance with state law, and the assets of the estate will be used to pay as many of them as possible. Any bills that are left over after the assets of the estate are used up will not be paid.
The heirs and beneficiaries of an estate have no personal responsibility for paying the decedents final bills (unless, of course, those bills represent joint debt).
About the Author:
To learn more about probate 101 and protect you from the cost of long term care, please visit the website of the experienced estate planning attorneys Spokane WA of the Moulton Law Offices today.
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