Serving as the executor of someone’s estate is a big responsibility. You have to submit their estate plan to the probate court and distribute their property to their family members and loved ones, among other responsibilities.
However, before you can take the step of distributing the deceased person’s assets, you will first need to settle the outstanding accounts of the testator. Handling the tax responsibilities and debts of the deceased is an important part of probate administration.
Which debts do you have to pay before you can distribute assets from the estate to the beneficiaries?
Technically, all remaining debts demand repayment
As long as there are assets in the estate, creditors can still demand repayment. In fact, as the executor, you may need to liquidate the majority of the assets in the estate just to repay creditors. You may have to empty bank accounts or sell off property like real estate.
You will need to pay off credit card balances and medical debts. Any and all creditors that make a valid claim against the estate have priority over the distribution of assets to beneficiaries.
Failing to pay the debts could cost you
As the executor, you are the one with ultimate financial responsibility if the debts do not get repaid. Although the courts will not hold you responsible for debts that exceeded the value of the assets in the estate, they can hold you accountable for the distribution of assets before the repayment of debts. Understanding the necessary steps in probate administration can help you avoid a potentially expensive mistake.