During the probate process, personal representatives review wills and attempt to follow the instructions of the deceased individual whose estate is at issue. If there is no will, then they follow the rules outlined in intestate succession laws.
Frequently, people focus on who has the right to inherit under state law or the instructions provided by the decedent. However, the right to inherit is subordinate to the fulfillment of the outstanding obligations of the deceased individual. Personal representatives administering estates have to address financial responsibilities before they distribute estate resources to heirs or beneficiaries.
What obligations take priority?
Under state statutes, most outside claims have priority over the inheritance rights of beneficiaries or heirs. Probate expenses, end-of-life medical care, funeral expenses and tax debts all require payment before a personal representative can begin to heirs or beneficiaries.
Even credit card balances may require payment before what remains of the estate gets distributed to beneficiaries or heirs. If personal representatives fail to notify creditors, file appropriate tax returns and appropriately distribute estate resources, they might eventually face personal financial responsibility.
Particularly when the debts may exceed the value of estate resources, personal representatives may need to delay the distribution of assets or proceeds from estate sales until after they settle all financial obligations. Those who agree to administer an estate may need to consult with an attorney to ensure that they fulfill their obligations and minimize their liability.
Learning more about probate proceedings can help beneficiaries and heirs temper their expectations and personal representatives minimize their financial exposure. An inheritance is only available after a personal representative has fulfilled the financial obligations of the decedent.
