Many things related to a person’s estate have to occur after they pass away. These tasks are left to the administrator of the estate. It is imperative that anyone who is creating an estate plan, as well as those who have to administer an estate, understand an estate’s bills and tax burden.
When a person passes away, handling the estate isn’t as easy as reading the will and handing out the assets named in it. Instead, there are specific things that an estate is responsible for. The assets held by the estate, with the exception of those in trusts that can’t be touched by creditors, have to be used to pay off the debts of the estate if creditors make a claim. The estate also has to file a final tax return.
Paying the estate’s bills
Unless a person is listed on an account with the decedent, they don’t have the responsibility to pay off the debts. For example, if your parent passes away and had credit card accounts, you wouldn’t have to use your personal money to pay those bills. Sometimes, unscrupulous debt collectors will try to tell you that you need to pay off the debt. They will attempt to get your personal information. Don’t give this to them.
The creditors should contact the estate administrator to make a claim against the estate. If the estate doesn’t have the money or assets to satisfy the debt, the bill will remain unpaid. If the creditor does make a claim, it will be paid according to a predetermined order. The estate administrator will handle this duty, and it must be concluded before the estate can be fully settled.
Taking care of federal taxes
Another one of the administrator’s duties is to prepare and file the final income tax return for the estate. The payment that’s due, if any, will be due nine months after the decedent’s death.
This has to be done in cash, so the person handling this will either have to pull cash from the estate or find assets they can liquidate to get the money to pay the tax burden. There might be other possibilities, so they should explore all options if there isn’t enough cash to take care of this.
Everything must be handled in a specific way when you are working with an estate. Doing things correctly can help your heirs since they won’t have to waste time or money.