When someone passes away, the value of their estate has to be distributed to their heirs and beneficiaries. People usually write a will, and they may even take other steps, like setting up a trust. Within the context of an estate plan, they may detail how their assets should be divided, who gets which items and how to keep as much of their wealth in their family as they can.
However, the probate process is not just about dividing wealth. Many people also have debts at the time of their passing. These may be significant, such as someone who passes away unexpectedly while they still have car loans, a home mortgage and business loans. There could also be smaller debts, however, such as credit card debt, taxes or utility payments. Even with an expected passing, someone will probably have some level of unpaid debt that needs to be taken care of. Who manages this responsibility?
The estate administrator
The person in charge of managing an estate’s debts, unless the estate plan explicitly states otherwise, is going to be the estate administrator. They are also the person who is supposed to inventory the estate’s assets and distribute them to the heirs. They have to take stock of the estate’s debts and pay them off as well. In many cases, these debts need to be paid before heirs can be given the money they were left as an inheritance.
One important thing to point out is that the estate administrator doesn’t need to worry about being financially responsible for this debt on their own. The administrator just uses the funds from the estate to pay off the debt and then divides what remains.
Working through the process
The probate process may involve a lot more than you had initially anticipated. You’ll want to make sure to get all of the details right. Be sure you know exactly what legal options you have to accomplish these goals both at the estate planning stage of things and at the estate administration phase of the overall process.