How the Probate Process Handles Debts
If your loved one has recently died and has left property, a mortgage, and some debts, it’s likely that the estate would be taken through the probate process. In 2016, only 44% of people in the U.S. had created an estate plan. In the event that your loved one had debts at the time of their death, some of these obligations may need to be paid off before assets can be distributed to beneficiaries.
What Is the Probate Process?
Probate is a common legal process that involves administering someone’s estate when they die. If your loved one has made a last will and testament, the probate process will focus on proving that the will is valid, that all debts are paid, and that all instructions in the will are executed accordingly. When people don’t create a will, the probate process can be time-consuming and complicated.
Along with determining who gets what, a will can be used to identify who will take care of the testator’s children in the event that each parent passes. When you create an estate plan, you can fill it with precise instructions and specifications on how you want your assets to be handled after you are gone. When someone dies without having created a will, the probate court will use the state’s intestacy law to determine how assets are distributed.
Types of Debts That Need to Be Paid During Probate
When someone dies but still has bills to pay and mortgage payments to make, these debts will invariably need to be paid from the decedent’s assets before any remaining assets are given to beneficiaries. Making a comprehensive list of the decedent’s debts can help to expedite the probate process once it begins.
If you have been named as the decedent’s executor or appointed by the court to be the estate’s administrator, the documents that you should look for include property taxes, mortgages, condominium fees, lines of credit, smartphone and utility bills, credit card bills, storage fees, car loans, personal loans, and federal income taxes. These debts can be paid off during probate or after the probate estate has been opened. Debts that are considered to be ongoing during probate are known as administrative expenses and include property taxes, utility bills, and any mortgages.
The debts that must be paid in full once the estate is open include personal loans, income taxes, smartphone bills, and credit card bills. These debts are considered to be the decedent’s last bills. While the administrative expenses need to be paid when they are due by the estate beneficiaries, the same isn’t true for the decedent’s last bills. If any personal loans or credit card bills remain, they will be paid by the executor or administrator during the probate process.
Once the probate estate has officially been opened, the estate’s executor will work towards paying off any remaining debts. During this time, the executor will try to determine which debts are legitimate and how much money is actually owed. Once these calculations have been made, the executor will be able to identify how much of the decedent’s assets will need to be sold or liquidated in order to make the debt payments.
If family members paid some of the decedent’s bills before probate started, the executor will likely pay them back. There is, however, an exception to this rule. In the event that real estate is being left in the possession of a beneficiary, bills don’t need to be repaid if the beneficiary was making payments on the property they’re about to receive.
How a New Jersey Estate Administration Lawyer Can Help You
If your loved one’s estate is about to be taken through the probate process, it’s highly recommended that you seek assistance from a New Jersey estate administration lawyer. While it’s possible for an estate to get through the probate process in less than six months if the will is uncontested, it’s much more common for this process to last for six to 12 months. If someone contests the will, the process could take even longer.
When you have a lawyer by your side who understands the probate process, you can be confident that it will be handled with care. Our lawyers can manage every facet of the probate process for you, which includes preparing inheritance tax returns, notifying interested parties that the probate process is set to begin, and preparing an exhaustive list of the estate’s assets and debts.
When you getting ready to go through the probate process, call our Hackensack lawyers today at (201) 996-1200 so that we can discuss your situation.