Estate administration makes a personal representative responsible for fulfilling certain financial obligations. They have a duty to manage a decedent’s estate, which includes paying their debts.
Personal representatives must review incoming mail and various financial records. They communicate with creditors and must repay them in the appropriate order of priority. Particularly in scenarios where an estate may not contain enough property to cover all of the decedent’s financial obligations, paying debts in the proper order is of the utmost importance.
What debts are the most critical during estate administration?
There are 8 priority classes for debts
State statutes provide clear guidelines regarding which debts take priority over other financial obligations during estate administration. Funeral and end-of-life care costs are top priorities as Class 1 financial claims.
The final expenses of the decedent’s life are the first priority when using estate resources to cover debts. The estate generally needs to cover the first $15,000 each in final medical expenses and funeral costs before treating any additional amounts owed as unsecured debts.
Probate and estate administration costs are the second category of costs to cover. Attorney fees, court expenses and the expenses accrued while managing the estate are all Class 2 priorities. Secured debts such as tax liens follow in the third category.
After that comes child support debt. Actual tax debts may fall into the fifth category. Debts related to incarceration are the next consideration, followed by medical benefit recovery efforts. Finally, any other unsecured debts receive the lowest degree of priority.
Errors during estate administration can lead to liability for the personal representative. Securing support during estate administration can help personal representatives avoid costly mistakes and oversights.