While an estate plan focuses on one’s assets and wishes when it comes to the distribution of their property after their death, the administration of an estate also focuses on the debts that a person leaves behind. Thus, it is important to consider this factor when making an estate plan in Texas and elsewhere, as these debts could be burdensome. Additionally, this could help when naming an executor or personal representative, as these matters could range from simple to complex.
Debt during estate administration
Handling the debt of a decedent is a process that requires careful planning. When an executer is addressing the claims against the estate, these can be either simple or complicated. They are essentially simple if the estate is solvent, and they would be complicated if it is not solvent.
It is the duty of the executer to marshal the assets and the debts of the estate. Generally, this is a relatively straightforward task, as it involves making an inventory of the decedent’s debts, determining the validity of these debts, and paying them in the proper order.
Validating debts against an estate
Establishing the validity of a debt is fairly clear-cut, as the decedent either contracted for the services rendered or purchased the goods that was in his or her possession at the time of their death. However, there are times where debts are not clear-cut. These are claims involving verbal agreements. These are difficult to prove, as there is no physical evidence validating them.
Order of debt payments
In an insolvent estate, debts should be paid in a certain order. First, administration expenses should be paid. Next, reasonable funeral expenses and debts or taxes with preference under federal law. This is followed by reasonable and necessary medical bills, debts and taxes with preference under the sate law and reimbursement of payment of benefits. Any other remaining claims will be paid last.
The estate administration process may not pan out the way individuals intended. This is why it is important to gain a full picture perspective f the matter. If issues do occur during the administration of an estate, it is important that proper legal action is taken to ensure this process is completed in accordance to the wishes of the deceased and the laws of the state of Texas