Handling The Debts & Taxes Of The Decedent In Probate
In This Article, You Will Discover:
- Who is responsible for handling federal taxes.
- When court and attorney fees are paid.
- How to notify creditors of a testator’s passing.
- and more…
Is It The Personal Representative’s Responsibility to Identify And Notify The Deceased Individual’s Creditors And Handle Any Outstanding Debts?
Sometimes the personal representative must identify and notify the deceased individual’s creditors and handle outstanding debts. When you file a probate, you must complete a notice to creditors in the newspaper, which is automatically completed for clients as part of our probate services.
Sometimes we get claims; however, it is up to the personal representative to decide whether the claim is factual. If the representative decides the claim is inaccurate, then it’s up to the creditor to file a suit into the probate to establish that the claim is valid.
This series of events only happen if you’re in a dependent administration and have a mortgage on a property. When determining how to proceed, we tend to ask:
- What do you think the decedent wants?
- What do the heirs wish to happen?
To proactively pay debts, you can pull credit reports and use other conduits to get as much information as possible. Though different from secured creditors on a house, car, or similar asset, there’s no proactive requirement for you to notify them outside of the newspaper publication.
Is It The Personal Representative’s Responsibility To Handle The Federal Taxes On Behalf Of The Deceased?
The responsibility of handling federal taxes on behalf of the deceased would fall under the personal representative, but often there is no need as certain thresholds must be met.
Usually, handling these taxes is only necessary if there is a debt that needs to be paid that the personal representative may be personally liable for or an expected return. Most of the time, whatever the refund would be is less than the costs to go after and deal with it.
Does The Executor Or Personal Representative Have To Pay The Ongoing Expenses Of Administering The Estate Or Probate, Including Court And Attorney Fees?
Typically, the personal representative is also the heir. When they come to us and pay the initial fee and court fees, they will get reimbursed when they get the estate.
If you have a dependent administration, the heirs or personal representative must pay those debts upfront and have the court approve reimbursement for those items. This is a rare situation as, generally, all the heirs are on board and agree on how things will be taken care of, or it’s just a single heir, and it doesn’t matter.
If There’s Not Enough Money In The Estate To Pay Creditors, Attorneys, And Beneficiaries, What Happens?
The logistics and financial management aspect of estate planning is something that we try to figure out upfront. We want to know what assets exist and what the overall situation is.
Sometimes after a consultation, we come to the conclusion that there is no point in continuing the process. If the assets are less than what it’s going to cost to go to court or there’s just not going to be enough to come back through, we reassess the point of moving forward.
The court must approve the usage of the funds before it’s spent or sent anywhere, which relieves the personal representative of their liability for dispersing money to the beneficiaries or heirs.
With the guidance of a skilled attorney for Probate Cases, you can have the peace of mind that comes with knowing that we’ll make it look easy.