Probate is the legal process that occurs after someone passes away. During this process, the deceased person’s assets are distributed to their heirs and beneficiaries. However, before any distributions can be made, certain debts and expenses must be paid off. This guide explains the process of probate who gets paid first, and the order in which these payments are made during probate.
Uniform Probate Code states specify in probate who gets paid first.
The Uniform Probate Code (UPC) plays a crucial role in establishing a clear framework for the orderly payment of creditors in probate proceedings. Under the UPC, specific rules are in place to prioritize and allocate the deceased person’s assets to satisfy outstanding debts. This standardized approach ensures fairness and consistency in the distribution process. The UPC outlines a predetermined order in which creditors are paid, typically starting with funeral expenses and administrative costs, followed by secured creditors, such as mortgage holders, and then unsecured creditors. By providing this structured hierarchy, the UPC helps streamline the probate process, enabling the orderly resolution of debts while safeguarding the rights and interests of all involved parties.
States that have adopted the Uniform Probate Code.
The first expenses to be paid during probate are typically funeral expenses and administration costs. These can include the cost of the funeral, any outstanding medical bills, and fees for the executor or administrator of the estate. This also includes legal fees and fees for the personal representative. In other words, if you want guidance with the probate process, there is nothing stopping you from getting a probate lawyer to help you. And even if your loved one left more debt than assets, you can get paid for your time to administer everything.
Taxes owed to the government.
After funeral expenses and administration costs are paid, any taxes owed to the government must be paid from the estate. This includes federal and state income taxes, as well as any estate taxes that may be owed. The personal representative of the estate is responsible for filing the necessary tax returns and paying any taxes owed. If there are not enough liquid assets to cover the taxes owed, the personal representative may need to sell other assets to cover the costs. It’s important to note that tax laws can be complex, so it’s recommended to consult with a tax professional or attorney during the probate process.
Secured debts, such as mortgages or car loans.
Secured debts, such as mortgages or car loans, are typically paid next in the probate process. These debts are secured by collateral, such as a house or car, which can be sold to pay off the debt. If the sale of the collateral does not cover the full amount owed, the remaining balance may be considered an unsecured debt and paid off in the next stage of the probate process. It’s important to note that if the estate does not have enough assets to cover all secured debts, the lender may have the right to repossess the collateral.
Unsecured debts, such as credit card balances or medical bills.
After secured debts are paid off in the probate process, unsecured debts are typically paid next. These include credit card balances, medical bills, and personal loans. If there are not enough assets in the estate to cover all of the unsecured debts, they may be paid off in order of priority set by state law. It’s important to note that family members or heirs are not responsible for paying off the deceased’s debts with their own money, unless they were a co-signer or joint account holder on the debt.
Claims by beneficiaries or heirs.
After all debts and expenses have been paid, any remaining assets in the estate will be distributed to the beneficiaries or heirs according to the deceased’s will or state law if there is no will. However, it’s not uncommon for beneficiaries or heirs to make claims against the estate, disputing the distribution of assets. In these cases, the court will review the claims and make a decision on how to distribute the assets.
Probate who gets paid first if there is no probate?
In Arizona, according to A.R.S. 14-6102, creditors are entitled to be paid even if there is not a probate. In other words, if assets are passed directly to beneficiaries through beneficiary designations or otherwise, creditors are entitled to be paid.
Summary: Probate Who Gets Paid First?
If you have a probate and are wondering who gets paid first, give us a call. At Sudden Wealth Protection Law, our experienced probate team is here to guide you through the complex process of identifying and satisfying creditors’ claims. Don’t let the confusion and potential disputes derail the probate proceedings—contact our firm today for expert legal advice and assistance. With our knowledgeable team by your side, you can navigate the intricacies of probate creditor claims and ensure that the rightful beneficiaries receive their inheritance while meeting your legal obligations. Call us now at 602-443-4888 to schedule a consultation, protect your loved one’s legacy and bring clarity to the creditor payment process.