When a loved one passes away, decisions have to be made about how the estate will be handled and where assets will be distributed. An executor named in the will typically handles those duties, or if the person died without an estate plan, the probate court will assign an administrator instead. Whoever is placed in that important role must pay off the deceased’s remaining debts, which can be trickier than it sounds. Our New York estate lawyer explains more.
Knowing Which Debts to Pay in What Order During Probate
Part of the probate process involves notifying creditors of the death, and then paying outstanding bills before anything is distributed to the surviving family. Generally, debts in New York are legally required to be paid in this order:
- Reasonable funeral costs and estate administration expenses
- Federal debts
- State debts
- Property taxes assessed before the person died
- Court judgments, decrees, and bonds issued before death
- All other contractual debts
In cases where the estate’s assets can’t cover all the outstanding amounts due, priority is given to paying expenses for the funeral and administering the estate before debts are paid. Navigating these debt payment requirements is easier with the help of an attorney to protect your legal rights and ensure the estate is handled properly.
The executor additionally handles other tasks, such as closing accounts, filing a tax return for the final year the deceased was alive, managing or selling property, and finally distributing assets to heirs and beneficiaries.
Some assets, like retirement accounts and life insurance, are protected from creditors. Utilizing various kinds of trusts before death is another useful strategy for protecting assets and ensuring they remain with the family.
Schedule a Consultation Today with our New York Estate Planning Attorney
Alatsas Law Firm is conveniently located for residents of Brooklyn, Queens, and Staten Island. Our ground floor office is handicapped accessible with a subway stop and two bus lines nearby.
We know that dealing with legal issues affecting your family can be stressful, but we will proactively work to provide you with peace of mind as you move forward. If you’re in need of assistance with a divorce or family law concern, contact us today at 718-233-2903 to schedule a free, no-obligation initial consultation.