Probate court can be a frustration for the family members involved. The executor or personal representative of the estate needs to honor numerous responsibilities until they complete the probate process. Family members may have to wait months or sometimes longer than a year to receive the inheritance that someone else has left for them.
Probate proceedings generally create a lengthy delay before the personal representative can fulfill someone’s last wishes and can potentially diminish how much people inherit from the estate. One of the factors that can have a profound impact on the final value of someone’s estate will be the personal debts that they owe when they die.
How debts affect the probate process
Any assets owned solely by the deceased individual become their estate, and any debts that they owe become the responsibility of their estate. Credit card balances, hospital bills and even Medicaid estate recovery efforts can claim thousands of dollars from the estate. Creditors will receive formal notice of estate administration and can then submit a claim for repayment in court.
The person administering the estate has an obligation to use estate resources to handle financial obligations in the appropriate order of legal priority. In other words, they will need to use the assets included in the estate to pay creditor claims and probate costs before they distribute anything to the beneficiaries. If there aren’t enough assets to cover all the debts someone leaves when they die, the representative of the estate may not be able to distribute anything to someone’s beneficiaries. When an executor makes a mistake and hands out assets to beneficiaries without paying someone’s debts, they may become personally responsible for the value of the assets they improperly managed.
Issues with unpaid creditors could eventually mean that there are no assets left to distribute to beneficiaries, and scenarios involving insufficient resources could potentially also lead to liability for the personal representative tasked with estate administration. Those who plan ahead to cover their debts can reduce the effect that those dents will have on their loved ones’ inheritances.
Understanding the impact that debt can have on the probate process may benefit those with a responsibility to an estate as well as those hoping to inherit from an estate. Seeking legal guidance can help individuals to benefit from this kind of clarity.