A loved one designated you the executor of her or his estate. You know the role requires you to distribute assets, but you must also handle the decedent’s outstanding debts.
American Bar Association breaks down how to pay off debts while acting as an estate executor. Understand how to carry out all your responsibilities.
Bills unpaid, expenses incurred
You must know which bills remain unpaid after your loved one’s death and expenses resulting from administrating the estate. If you do not pay casualty or property insurance or real estate taxes quickly, the decedent’s estate could suffer. Executors must either pay outstanding bills or let creditors know about temporary payment delays. Look into unpaid debts and expenses thoroughly, as you do not want to become liable for leaving the estate’s assets unguarded or improper spending.
Determine whether you must file the deceased’s last income tax return the year she or he died. You may also need to file returns as part of an extension or for a generation-skipping tax return. A financial professional could help you find out whether you should worry about estate tax exemptions. If you do, you could need to file a federal estate tax return.
Track expenses incurred while administering a trust or estate. Common examples include appraisal fees, funeral expenses, financial and legal professional fees, and insurance premiums. Maintain thorough records and keep all receipts. You may receive expenses payable to you or a relative. If so, consult a professional to see if you should exercise caution.
Executors must learn every aspect of their role. Knowledge gaps could spark disaster for them, beneficiaries and the estate.