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2 probate obligations that take precedence over beneficiaries

On Behalf of | Feb 14, 2023 | Probate

Probate administration can be a lengthy process. Depending on the total value of the assets that make up someone’s estate, Texas probate court oversight may be required at every stage of the process. It may take a year or longer to fully resolve someone’s obligations and distribute their property to their beneficiaries.

Family members and charitable causes are usually the primary beneficiaries of people’s estates. Yet, whatever rights an individual or organization might have under the law as a result of someone’s testamentary documents, those rights typically do not supersede the rights of various parties owed money by the deceased individual.

No matter how close someone’s relationship with the deceased party was or how clear their instructions were detailed in their estate plan, there are probate obligations that legally must be fulfilled before remaining property can be distributed to beneficiaries. Otherwise, the executor will run the risk of incurring personal responsibility for unpaid amounts.

1. Personal debts

People often die with thousands of dollars in debt outstanding. They may still owe student loan payments and may have required emergency medical care prior to their death. Creditors have the right to make a claim against someone’s estate for such unpaid balances.

Most debts are treated as priorities that supersede the rights of family members and named beneficiaries. If an estate does not pay off all creditors, the executor could end up responsible for the value of any assets that were improperly distributed.

2. Taxes

There are several kinds of taxes that may affect estate administration as well, such as multimillion-dollar estates.

For most families, income taxes for the deceased party and possibly income taxes for the estate serve as primary tax obligations. The executor will usually file the return. If they have to sell any property from the estate and they generate more than $600 in proceeds as a result, the estate will also require an income tax return. The executor should retain sufficient funds to meet those income tax obligations or they could end up responsible for failing to pay taxes.

Understanding the rules that apply during probate administration can help those planning their estate, hoping to benefit from an estate or assisting with probate proceedings to make truly informed decisions about their situation. When it comes to estate planning and estate administration, knowledge is power.