As you plan your estate, you want to make your executor’s job as easy as possible. If you expect to leave unpaid debts when you die, how should your executor tie up your financial affairs?
American Bar Association explains how executors navigate debt and expenses. Set your estate administrator up for success and peace of mind.
Executors must know when to settle outstanding debts when a person dies, and the same applies to estate administration expenses. After determining debt due dates, estate administrators should either let creditors know whether to expect a payment delay or clear the debt. To avoid unnecessary issues, executors must pay real estate taxes, property bills and casualty insurance bills sooner rather than later.
Estate administrators may want to consult with experienced professionals to understand how to spend trust and estate assets the right way. Improper spending and neglecting to protect estate assets could cause legal liability.
Filing tax returns
Executors may need to file tax returns while settling an estate. Examples of such tax returns include generation-skipping tax and final income tax. Sometimes, decedents cannot file tax returns during the last year or final years of life because of health issues. Estate administrators should do a bit of digging to learn whether the deceased filed all necessary returns. Executors may need to file a federal estate tax return if the decedent’s estate value does not fall outside California’s current estate tax exemption amount.
Well-informed executors often have all the information they need to perform their responsibilities. Do your part to help them help you and your loved ones.