There are many expenses to address after someone dies. Funerals are expensive. So are probate proceedings. Families have to pay for the courts to oversee estate administration and settle any disputes about property. Typically, the assets that become the property of the decedent’s estate can help settle their posthumous financial obligations.
Fulfilling financial responsibilities is an important part of estate administration. Before anyone receives an inheritance, it is typically necessary for the estate to first fulfill the financial obligations of the deceased individual.
That process may involve paying off and settling various debts. What financial obligations generally require repayment during probate proceedings?
Most debts pass to the estate
Financial obligations do not simply disappear when a debtor or borrower dies. Instead, responsibility for those debts transfers to the estate. Some debts may have cosigners who must assume responsibility when the other party dies. However, any debts held solely in the name of the decedent are likely the direct responsibility of their estate after their passing.
In cases where the estate has insufficient assets given the overall amount owed, personal representatives may need to take care to ensure that they pay debts in the proper order of priority. Taxes and probate expenses generally take priority over unsecured credit card balances, for example.
Typically, any valid debts presented appropriately during probate require repayment. If personal representatives do not address debts appropriately, they could be at risk of personal liability for those financial obligations.
Knowing what is necessary during probate proceedings can take much of the risk out of estate administration. Personal debts owed by the decedent are an important responsibility to address early in the probate process.