When a parent or a grandparent passes away before their finances, assets, and properties can be adequately distributed to their inheritors, debts must be paid beforehand. Creating a Will to oversee the proper distribution of those assets and a course of action to pay off the debts. The executor of the Will is in charge of this and is either a court-appointed individual or has already been listed in the Will.
If there are debts, the executor may decide to sell assets to pay off debts.
This is the order typically used to prioritize the payments:
- Funeral expenses and expenses of last illness, not to exceed $15,000
- Allowances made to decedent’s surviving spouse and children
- Expenses of administration, expenses in preserving, safekeeping, and managing the estate, including fees
- Secured debts, such as car loans and mortgages.
- Delinquent child support
- Taxes, penalties, and interest
- Medicaid repayments
- Unsecured debts, such as credit cards.
- The remainder of the assets are paid to beneficiaries.
The Responsibility of the Estate
Are you worried that your parents have amassed a large amount of debt? Unless you have co-signed loans or credit cards, generally the estate has the responsibility of handling that debt. If you are not the child but are the beneficiary of the estate, the debts will be part of the estate. That means that creditors can still make demands for repayment.
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Dossey & Jones, PLLC serves Conroe, Montgomery, and Spring, Texas with top-notch legal service across many areas of law, including estate planning. If you are looking for counsel, call us to schedule a no-risk, no-obligation appointment today!
All information provided is strictly for informative purposes, and not to be taken as legal advice.