Unfortunately for many of us, debt is an everyday reality. When a person dies, these debts may still need to be resolved. The personal representative of an estate is tasked with the responsibility of addressing these debts during the estate administration. It is important to understand which debts need to be paid and in what order. To do so, the personal representative must be aware of what debts exist.
7 Types of Debt That May Be Involved in an Estate Administration
What type of debts are commonly involved in an estate administration? The following are seven examples:
- Credit card debt
- Student loan debt
- Mortgage loans
- Personal loans
- Business loans
- Unpaid federal, state, and local taxes
- Bills for services provided
Since every estate is unique, there could be many other types of debts that need to be addressed after your loved one dies and the administration of his or her affairs begins. How these debts should be handled depends on various factors. Some debts may not need to be paid at all, as the obligations of the decedent end upon his or her death. Other types of debt must be paid from the assets within the estate. Of these debts, there are specific priority rules that must be followed during the estate administration process. The priority of payment of debts may also be dictated in the decedent’s will and trust. Generally, the relatives of a decedent are not responsible for the debts of an estate.
Deciding how to handle the debts of an estate requires the assistance of a knowledgeable legal professional. We can provide you with the help you need. We encourage you to contact us today at 714-459-5481.