Probate proceedings involve court oversight of how you distribute someone’s property. They are more than just long and dull hearings where you submit paperwork and discuss someone’s will or other testamentary documents. Estate administration in probate court also provides an opportunity for you to settle someone’s financial obligations after they die.
As the executor or personal representative of someone’s estate, there are certain financial obligations you have to fulfill. Failing to do so could leave you vulnerable and cause personal financial liability.
What responsibilities do you have to ensure that you fulfill during estate administration?
Notifying and repaying creditors
Minnesota estate law requires that the executor of an estate notify all known and unknown creditors. They do this by sending letters, making phone calls and even publishing notice of estate administration. They must then give these creditors an opportunity to make a claim against the estate.
The debts owed by someone who dies don’t just disappear at the time of their death. They may pass to cosigners or co-borrowers. If there are no co-borrowers, then the estate of the deceased becomes responsible for their debts. They may need to sell someone’s property to repay creditors.
Even if you have nothing left to give to their family members after repaying their debts, it will be necessary for you to fully repay their creditors if possible. Failing to do so and then distributing property to beneficiaries of the estate leaves you personally vulnerable to claims made by those creditors later.
Filing and paying taxes
There are multiple taxes that can apply to an estate. You may need to file an income tax return for the deceased party. You may need to pay estate taxes if they left behind millions of dollars and property. If you sell their property as part of the probate process, you may need to pay income taxes on the proceeds of those estate sales.
As with personal debts, unpaid taxes can lead to liability for the executor of an estate if tax authorities can show that they inappropriately distributed assets rather than payed taxes. Identifying and fulfilling financial obligations is a crucial step for those managing the estate of someone recently deceased.
