The executor for an estate is often charged with taking care of the bills and financial obligations of the estate when the person who owned it passes away. After all, even if that person worked hard to be up-to-date on the bills, there may be final payments for utilities, credit cards, mortgage payments, funeral costs, taxes and much more.
Someone has to take care of these as the estate gets divided up, and the bills may extend over time if this division does not happen right away. For instance, siblings may opt to keep a house for 12 months to sell in a stronger market, and then they have to pay all related costs for the next year.
So, should the executor pay off as many bills as possible, as quickly as he or she can do so?
While it is wise to act quickly, you do not want to do things too quickly. Before making any payments, look into the different types that are owed and find out what priority they take.
For instance, taxes owed to the government are typically the top priority. If the estate does not have enough money to cover all of the costs, you may not want to pay the taxes last. You may not have enough money after you've paid minor charges like credit card bills, water bills and electric bills. Slow down, take the time to really consider all of the payments, and then move forward with a deliberate plan to get everything squared away.
Estate administration can be complex, especially when mistakes are made or beneficiaries do not agree. Everyone involved needs to make sure they know their legal rights.
Source: MarketWatch, "The biggest mistakes executors make," Veronica Dagher, accessed May 31, 2018