topic | pay estate debts, taxes, and expenses

Preparation for settling the affairs of the estate has been extensive. Congratulations! The hard work put into inventorying assets, liabilities, household and personal property, as well as communicating progress to all involved, will soon pay off.

Before the estate is distributed, all debts, tax obligations, and remaining expenses must be finalized and retired. Estate debts, expenses, taxes and debts are the responsibility of the estate. All payments should be made through the estate checking account established in the Topic: Gathering Information and Making Notifications.

Personal funds should only be used to pay debt if:

  • The executor’s name is on the account where payment is due.
  • The executor has made an error in giving away estate funds (except the family allowance) before all debts were paid.
  • The executor has fraudulently used estate funds.

Estate debts are paid in order of importance as specified by the decedent’s domicile probate code. The priority of payment is especially important if the estate is insolvent or has limited funds. As payments are prioritized, routine bills, such as utilities, should be paid.

The Steps that follow are in the generally accepted sequence to settle debts of the estate. Validate this sequence with the probate court or an estate attorney before proceeding.

    Step 1: Pay Family Allowances  
    Step 2: Pay Professional Administration Expenses  
    Step 3: Pay Funeral Costs  
    Step 4: Pay Taxes  
    Step 5: Pay Medical Expenses and Other Debts