Most people die and leave uncollected assets and liabilities. To collect or distribute the assets, you must follow a legal procedure, and this is known as probate. If this is granted and there are debts surrounding the assets, these should be cleared before distributing the estate among the beneficiaries.
You should start by paying secured debts like mortgages and later clear unsecured debts like credit cards and utility bills. However, dealing with debts is a complex process, and a probate attorney will help you understand how to handle this right.
Check out tips to handling dents& mortgage before probate:
- List all the liabilities.
Before commencing the probate, come up with a list of all the liabilities. This will ease the process and save time. Examples of bills and statements to include in your list include;
- Lines of credit
- Property taxes
- Condominium Fees
- Car loans
- Federal and state income taxes
- Personal loans
- Storage fees
- Credit card bills
- Utility bills
- Cellphone bills and more
- Divide the liabilities into two categories
Categorize the liabilities into two groups; these include liabilities that will be ongoing during the probate, and these are administrative liabilities. Also, have a list of liabilities that you’ll pay in full after the probate state is opened. The administrative expenses include property taxes, condominium fees, storage fees, utility bills, and mortgages. These should remain current until the estate closes. As the estate beneficiary, you’ll pay these liabilities until the opening of the probate estate.
- Don’t pay final bills out of your pocket.
You’ll also incur some final bills relating to the deceased. These can be, for example;
- Income taxes
- Credit card bills
- Loans against life insurance
- Retirement accounts and more.
As the beneficiary, don’t pay up the expenses from your pocket; instead, wait for the executor to handle them when settling the estate.
Also, decide whether you plan to keep the assets with loans against them. If you intend to keep assets like a car or home, you’ll have to continue paying the attached debt. Otherwise, settle all other payments from the state.
How long will the probate period take& Do I need a probate attorney?
This depends on the complexity of the estate. For instance, in complicated estates, the process is quick. However, there are probate forms to be signed and interviews to be conducted, meaning there’s no exact time limit. To avoid mistakes, engage a lawyer to help you identify the estate’s assets and clarify issues regarding the will.
What’s more, some factors can lengthen the probate process. And this usually happens when the estate’s value transcends the inheritance tax threshold. Such cases require the preparation of an inheritance tax account.
Other factors that prolong the process are;
- When the deceased owned businesses
- When the will is contested
- The deceased is the beneficiary of trust
- The estate includes agricultural property.
A quick wrap up
If the deceased person left multiple assets and businesses, the probate process might be complex. And this is particularly true if there are debts and mortgages involved. In this case, you should consult a probate lawyer to guide you throughout the process.