As the executor for the estate of someone who has recently died, it is very important that you understand the legal process required to settle any debts that need to be paid by the estate. By following the procedure below, you can ensure that you properly administer the estate and pay the necessary bills as required by law.
The Public Notice to Creditors
At the same time as the estate's attorney files the probate case in court, you are required to publish a legal notice in your local newspaper. This notice is called the "public notice to creditors" and is required by law to run in your newspaper for four consecutive weeks. Once the public notice has finished being published, then any creditors of the estate have four months to notify the probate court that they have a right to a portion of the estate's assets.
The Estate Checking Account
You should open a checking account just for the probate process. All money from the sale of any assets of the estate must be deposited into this account. All debt and bills related to the administration of the estate are also to be paid out of this account. Having a separate account for the estate allows you to track all assets and debt payments. It also allows you to provide detailed and accurate records to the probate court if necessary.
The Debt Payment Importance Ranking
There are both federal and state laws that govern the order that creditors are to be paid during the probate process. The laws rank creditors in by importance, and as the executor, you are responsible to pay each debt in the order of the highest ranking first on down the list. While your attorney can clarify the exact order for your state, in general, debts are paid in the following order:
- funeral and burial costs
- costs to administer the estate
- spousal allowance
- federal taxes
- state taxes
- medical debt
Once all of the above debts have been paid, then any remaining funds are used to pay for outstanding consumer debt and then split between the heirs of the estate as their inheritance.
By following the debt payment process above, you can ensure that you are judicially handling the post-death debts of the estate you are administrating. If you have additional questions about the probate debt payment process, then you need to speak with a general practice attorney like Butts, Schneider & Butts LLP.Share