3 Debts That May Need to Be Paid During Probate
Going to succession court in Louisiana can be a lengthy and sometimes stressful process. The personal representative handling another individual’s affairs needs to initiate the succession process, communicate with interested parties and properly distribute the resources owned by the decedent.
Mistakes during the succession process can sometimes lead to personal liability for the representative. They may end up responsible for debts owed by the decedent. That risk arises when they had estate resources to pay the debt but they failed to do so.
Representatives usually need to make a point of proactively communicating with creditors so that they can make claims in succession court as necessary for their repayment. What debts does an estate often need to cover on behalf of a deceased individual?
Personal Debts Like Credit Cards
Financial obligations accrued throughout life become the obligation of an estate after an individual dies. Credit cards held solely by the decedent and student loans are perfect examples of personal financial responsibilities that become the obligation of the estate. Although unsecured debts typically have the lowest priority during estate administration, they do require repayment before beneficiaries can inherit from the estate.
End-of-life Medical Care Costs
Someone who generally does not have any debts can accrue major financial obligations in their last days of life. Particularly when older adults need intensive support that Medicare does not cover, they may pass away with a large amount of last-minute medical debt. The estate of the deceased individual typically has an obligation to pay their medical debts and any funeral or burial costs, as well as succession court costs, using estate resources.
Income Tax Obligations
The personal representative of an estate in Louisiana often has to file one last tax return on behalf of the deceased individual. They may also need to file an income tax return on behalf of the estate. The estate generally needs to cover those tax responsibilities before the personal representative can distribute any resources to the heirs or beneficiaries of the decedent.
Learning about creditor claims and estate obligations can be beneficial for those overseeing the succession process. Personal representatives need to be proactive about handling debts or they may be at risk of personal responsibility if they fail to properly allocate the estate’s resources.
