How to Handle Estate Debts and Liabilities in Texas
When a loved one passes away, dealing with their estate can be an emotional and complex process. It is beneficial to understand how to manage the debts and liabilities of the deceased to ensure a smooth probate process. A Texas lawyer can guide you through the steps to handle estate debts and liabilities.
Understanding the Probate Process
The legal process of settling a deceased person's estate, which includes distributing assets and paying off debts, is called probate. In Texas, the initiation of the probate procedure occurs when the executor or administrator of the estate submits an application to the probate court in the county where the deceased was domiciled. During probate, the executor or administrator is responsible for identifying and paying off the estate's debts and liabilities before distributing the remaining assets to the beneficiaries.
Prioritizing Debts and Liabilities
Under Texas law, certain debts and liabilities take priority over others. The executor or administrator must pay off these debts in the following order:
- Funeral expenses and last illness expenses
- Administration expenses
- Secured debts (e.g., mortgages, car loans)
- Child support arrears
- Taxes due to the State of Texas
- Other claims against the estate
Following this order of priority is vital to avoid potential legal issues.
Notifying Creditors
Once the probate process begins, the executor or administrator must notify the deceased's creditors of their passing. In Texas, there are two ways to notify creditors:
- Publishing a notice in a local newspaper
- Sending written notices directly to known creditors
Creditors have four months from the date of receiving the notice to file a claim against the estate. If a creditor fails to file a claim within this time frame, their claim may be barred.
Handling Secured Debts
Secured debts, such as mortgages or car loans, are collateral-backed debts. If the deceased had any secured debts, the executor or administrator must decide whether to:
- Continue making payments on the debt
- Sell the collateral to pay off the debt
- Allow the creditor to repossess the collateral
The best course of action will depend on the estate's financial situation and the beneficiaries' wishes.
Insolvent Estates
If the estate's debts and liabilities exceed its assets, it is considered an insolvent estate. In this case, the executor or administrator must follow the priority order for paying off debts. Unsecured creditors, such as credit card companies, may not receive full payment or any payment at all.
Contact a Comal County, TX Estate Planning Attorney
Managing estate debts and liabilities requires a thorough understanding of the probate process and state laws. Executives and administrators can successfully settle an estate's financial obligations by prioritizing debts, notifying creditors, and making informed decisions about secured debts. Seeking the advice of a knowledgeable Wilson County, TX estate planning lawyer who has been helping people just like you for nearly two decades can help you through the steps. Call [[title][ at 210-535-0870 for a free consultation.