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How Are a Deceased Person's Debts Handled Before and During Probate?

Ongoing vs. Final Bills


If your loved one has died and a probate estate will be required, then you'll need to understand how your loved one's final bills and other debts will be handled before and during the probate process.

Dealing With Bills Before Probate

Prior to the probate estate being opened, the first step will be to make a complete list of the liabilities of the decedent, including:

  • Mortgages

  • Lines of credit

  • Condominium fees

  • Property taxes

  • Federal and state income taxes

  • Car and boat loans

  • Personal loans, including student loans

  • Storage fees

  • Loans against life insurance policies

  • Loans against retirement accounts

  • Credit card bills

  • Utility bills

  • Cell phone bills

Once the list of liabilities has been compiled, divide them into two categories:

  1. Liabilities that will be ongoing during probate (these are referred to as administrative expenses), and

  2. Liabilities that can be paid in full once the probate estate is opened (these are referred to as final bills).

Administrative expenses include mortgages, lines of credit, condominium fees, property taxes, storage fees, and utility bills. To the extent possible, the estate beneficiaries should continue to pay these bills until the probate estate is opened.

Final bills include income taxes, personal loans, loans against life insurance and retirement accounts, credit card bills, and cell phone bills. The estate beneficiaries should not pay any final bills out of pocket and instead should wait to allow the Personal Representative to deal with them.

For some liabilities, such as car and boat loans, and in certain circumstances the expenses associated with maintaining real estate, the beneficiaries will need to make a judgment call as to whether or not they intend to keep the car, boat, or real estate. If a beneficiary wants to keep the car, boat, or real estate, then the beneficiary should continue to pay down the debt. If none of the beneficiaries want to keep the car, boat, or real estate, then the payments should not be made.

Dealing With Bills During Probate

Once the Personal Representative has been appointed by the probate judge, the Personal Representative will be responsible for taking over payment of the administrative expenses and settling the decedent's final bills. This will include determining which debts are valid and to what extent and then assessing which, if any, of the decedent's assets will need to be liquidated or sold to pay the ongoing expenses and final bills.

If the beneficiaries have continued to pay some or all of the decedent's bills prior to the probate estate being opened, then the Personal Representative will need to determine if the bills should have been paid and to what extent. The Personal Representative should then reimburse the beneficiaries accordingly.

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