What debts should you repay during estate administration?
You take on several important responsibilities when you agreed to be someone’s personal representative or the executor of their estate. You must locate and secure their assets. You must coordinate estate administration with the probate courts. You will also need to distribute assets from the estate to resolve the testator’s obligations and fulfill their last wishes.
Paying someone’s debts is an important part of estate administration. What debts will you have to settle during the probate process?
The estate has to repay all valid debts and some benefits
The debts someone owes don’t disappear when they die. As long as there are still assets in someone’s estate, there is still an obligation to repay their creditors. As the executor of the estate, it will be your job to review the finances of the testator and send written notification to all known creditors. You may also publish notice of the probate proceedings so that unknown creditors can make a claim.
If you fail to notify and repay creditors while there are still assets in the estate, those creditors could hold you financially responsible for the unpaid debts. You will need to potentially sell assets and empty accounts to pay off creditors and settle accounts when someone dies. Only after you have covered all of their personal debts and taxes with estate assets can you distribute what remains to their beneficiaries.
Any assets distributed before you pay private debts, cover someone’s tax responsibilities and even repay their Medicaid benefits could be held against you personally. Learning about estate administration can help you avoid mistakes that could lead to personal consequences.