What happens to debts during probate?

On Behalf of | May 22, 2024 | Probate |

Probate is a legal process that takes place after someone dies. It involves proving that a deceased person’s will is valid, identifying their property, paying their debts and distributing the remaining assets to beneficiaries.

Understanding the basics of how debts are handled during probate can help make this challenging time a bit easier.

The role of the executor

The executor of the will has the responsibility of managing the deceased person’s estate. This includes paying off any outstanding bills. The executor must first notify creditors of the death, giving them the chance to file claims against the estate. This process ensures that all debts get addressed before any assets get distributed to the heirs.

Paying the debts

During probate, the executor uses the estate’s assets to pay off creditors. This might involve selling property or using funds from bank accounts. If the estate does not have enough assets to cover the debts, the probate court will prioritize which ones to pay first. Typically, funeral expenses, taxes and secured debts such as mortgages get paid before unsecured debts like credit card bills.

Insolvent estates

If an estate cannot cover all its bills, the court considers it insolvent. In this case, the executor pays the debts according to the court’s priority rules. Beneficiaries may not receive any inheritance if the debts consume the entire estate. However, family members are usually not responsible for paying these bills out of their own pockets unless they co-signed or guaranteed them.

Distributing the remaining assets

After paying all debts and expenses, the executor can distribute the remaining assets to the beneficiaries according to the will. If there is no will, the state’s intestacy laws determine how to distribute the assets. The probate process concludes once all debts get settled and assets get distributed.

Addressing debts during probate requires careful attention to detail to ensure the estate is settled fairly and efficiently.


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