Probate law demands that an executor must pay the debts and other financial obligations of an estate prior to distribution of assets to a Decedent’s beneficiaries. Although heirs and beneficiaries are not legally responsible for paying off estate debt, the total value of the estate can be greatly reduced as result of debt obligations.
Priority debt obligations.
Living trusts have little protection from creditors while a Decedent is alive. Revocable trusts enable an executor to coordinate debt payments in advance. Claims made against irrevocable trusts can also provide a creditor access to additional funds during the probate process after a Decedent has died. Insolvent estates without adequate liquidity to pay debts and obligations may still be subject to debt obligations after court filing fees, attorney’s fees, and executor costs to administer the estate have been paid. Other priority debt obligations include funeral and burial costs; federal and state taxes; medical bills; child support claims; dependent family support claims; judgments; followed by all other debt.