One of the main duties of an estate administrator is paying the debts of the estate. This is done with money in the estate since the bills shouldn't be passed down unless they are on something that is held jointly with someone else. There are a few things to know before you attempt to handle these debts after your loved one's death.
First, you need to make a complete list of the debts that must be addressed. These include things like property, federal, state and local taxes. It also includes loans of all sorts, including mortgages. Condominium fees, lines of credit, storage fees, utility bills, credit card bills and any other debt must be listed.
Second, you must determine which category each one of these bills should fall into. These two are:
- Final bills: These are things that can be paid off in their entirety.
- Administrative expenses: These are bills that will be ongoing during the probate process.
All income taxes, credit card bills and cellphone bills are examples of final bills. Mortgages, utility bills and property taxes are examples of administrative expenses. Some bills might change categories depending on what the ultimate outcome of the asset tied to them might be.
Assets and debts that are held jointly with someone else will likely fall on that other individual to pay. This is one of the challenging things about handling these affairs.
It is imperative that you know exactly what needs to be paid and how to do this during the probate process. Failing to pay required debts or doing this incorrectly could be costly to the estate and might draw the process out more than necessary.