Search

Working With Lawyers Every Day

How Probate Handles Debts

26 June 2019

Cassandra Stone

After the death of a loved one, dealing with the bills of the estate can be a complex chore. Whether you have been appointed as the personal representative (executor) or you are just helping sort out a loved one's affairs, you should prepare yourself to be organized and to follow your estate or probate lawyer's lead. Read on to learn more about estate debts during probate.

Probate and Debts

One of probate's main functions is to see to it that creditors are paid from the estate of the deceased. Death seldom cancels debts, so it's best if you get organized and make a list of all debts as soon as possible after the death. Make a list of your loved one's bills and don't forget to include tax debts. Filing a final tax return and ensuring that all tax debts are paid will become very important during probate. Other bills to list include mortgages, auto loans, credit card balances, personal loans, utilities, and more. The means to pay the following bills depend on the estate and the beneficiaries. Estate property might need to be liquidated to pay some debts. Bills can generally be divided into two main categories – ongoing and final.

1. Ongoing Bills – (also known as administrative bills). These are bills that help maintain the estate, such as utilities, condo fees, property taxes, and the mortgage. It's important to preserve the estate by attending to these bills during probate. For example, a home must be kept in good repair by attending to grass-cutting and keeping the power, gas, and water running. Generally, these bills are to be paid using estate funds, but you should consult with your lawyer to find out when and how to pay them.

2. Final Bills – This category of bills addresses the one-time payment of bills that have no effect on other estate property. Usually, this includes personal loans, cell phone and cable bills, credit cards, etc. Often, final bills are paid only at the completion of probate and should not be paid before or during that time.

A Special Note About Mortgages

The disposition of the family home might be the most valuable of all estate issues. Regardless of the beneficiary, if there is a mortgage owed on a home, there are some protections that prevent foreclosure. The Garn-St. Germain Act of 1982 allows beneficiaries to assume or refinance a home that is probated without fear of foreclosure. You must, however, continue to make the mortgage payments as usual while arrangements are made to assume the loan.

Your probate lawyer will guide you through not just bill-paying but through every aspect of attending to a loved one's estate.

For more information, contact a lawyer like H. Charles Woerner, Jr. PA.

Share