One of the most important duties of an estate executor involves the paying off of debts owed by the estate. These debts might include loans, credit card bills and tax debts.
The executor needs to determine the value of all the estate assets — including investment accounts, cash accounts, insurance proceeds, real estate and valuable possessions — and use those assets to pay off any debts.
Debts that the estate needs to pay in probate
Here are some examples of typical debts that an estate will need to pay off before distributing the remaining assets to heirs:
- Lines of credit for a business
- Mortgages on investment property and residential property
- Automobile loans
- Property taxes owed
- Fees owed to a condominium or neighborhood association
- Fees for storage
- Cellphone bills
- Utility bills
- Credit card balances
- Student loans and other kinds of personal loans
- Any kind of taxes that the decedent owed
The executor should make a list of these and other debts and liabilities owed by the estate as one of the first steps before filing for probate. Once the executor compiles this list, he or she should divide it into two categories. One will include liabilities that will continue to incur and need to be kept current during the probate process, such as utility bills, storage fees and — if necessary — compensation to the executor for services rendered. The other will include liabilities to be paid once the probate process opens, i.e., the decedent’s last bills.
Using available assets to pay off debts
The executor will need to determine if there is enough cash available to pay off debts. If not, he or she will need to liquidate certain assets to satisfy all amounts owed. In some cases, the executor may need to challenge a creditor that is claiming a debt to be paid. It could be that some creditors that step forward will not have a viable claim against the estate.
Once the executor has paid off all valid and appropriate debts and claims made against the estate, the executor will distribute remaining assets and proceeds to heirs in accordance with the will and overall estate plan.
Learn how to navigate your role as executor of an estate
Most people assigned to serve as the executor of an estate will not have any experience fulfilling such a rule. By learning about and studying the duties of an executor as well as the laws that apply to the Florida probate process, those who are serving as executors can navigate the process more effectively.