Your parents passed away recently, and you were named as the estate executor in their estate plan. This means that you are the one who carries out the instructions that they left in that plan. You may start by making an inventory of all of their assets, for example. After you have gathered these assets, you can consult the will to determine how they should be distributed.
While doing this, you may discover that your parents still have some remaining debt that hasn’t been paid off. In the case of an unexpected passing, there could be substantial debt – business loans, mortgage loans, car loans, student loans, etc. Even someone who passed away unexpectedly – and takes care of these major debts in advance – could still leave things like final property tax payments, income tax payments or credit card payments. What happens to this debt?
You have to pay it off
As the estate executor, it is your job to pay off some of this remaining debt. However, you don’t have to do it yourself, so don’t worry about inheriting debt from someone else. Instead, you can use the funds from your parents’ estate to pay off the money that they still owe.
This often has to happen before you distribute assets to beneficiaries. For example, say that your parents still owe property taxes. Their will may tell you to split the contents of their bank account between yourself and your siblings. You still get to do this, but you may have to pay the property taxes first, reducing the total amount of financial assets that you and your siblings will inherit.
Paying taxes is only one of the things you need to do as the estate executor. Be very sure you understand all of the necessary legal steps.
