If you are appointed as the executor of a Virginia estate for probate, one of your primary duties is to handle any debts owed by the decedent or their estate. The steps of the probate process must be carried out in order to prevent mistakes.
For example, after securing and establishing the value of all estate assets, you must pay any debts owed before distributing the assets to beneficiaries. You may have to liquidate some assets to cover debts – which you could not do if you already distributed them. Mishandling assets and debts, even accidentally, could make you responsible for the debt.
An Estate Administration Attorney from Promise Law in Newport News can provide valuable assistance with handling assets, debts and other aspects of carrying out your duties as an estate executor. Here are some common debts you may encounter in estate administration and how to handle paying estate debts.
Common Estate Debts in Virginia
- Estate administration expenses, including legal fees
- Funeral expenses
- Federal or state taxes, or the decedent’s personal income taxes
- Secured loans like mortgages, vehicle loans or lines of credit
- Outstanding medical expenses
- Child support payments
- Credit cards or other unsecured debt
Virginia probate law § 64.2-528 designates a prescribed order in which estate debts are to be paid when there is not enough money to pay all creditors. “When the assets of the decedent in his personal representative’s possession are not sufficient to satisfy all debts and demands against him, they shall be applied to the payment of such debts and demands in the following order:
- Costs and expenses of administration;
- The allowances provided in Article 2 (§ 2-309et seq.) of Chapter 3;
- Funeral expenses not to exceed $4,000;
- Debts and taxes with preference under federal law;
- Medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him not to exceed $2,150 for each hospital and nursing home and $425 for each person furnishing services or goods;
- Debts and taxes due the Commonwealth;
- Debts due as trustee for persons under disabilities; as receiver or commissioner under decree of court of the Commonwealth; as personal representative, guardian, conservator, or committee when the qualification was in the Commonwealth; and for moneys collected by anyone to the credit of another and not paid over, regardless of whether or not a bond has been executed for the faithful performance of the duties of the party so collecting such funds;
- Debts for child support arrearages;
- Debts and taxes due localities and municipal corporations of the Commonwealth; and
- All other claims.”
Basic Steps to Handle Estate Debts
Follow the two basic steps to handle any debts when you are the executor of a decedent’s estate in Virginia:
Approve, Dispute or Reject Claims of Debt
As the executor, it is your duty to investigate the claim’s legitimacy and verify the account’s accuracy. False claims, or those believed to be illegitimate can be rejected or disputed. You must wait an appropriate length of time to allow for all possible creditors to file a claim.
Pay Estate Debts
Approved claims are to be paid according to the guidelines set forth in Virginia state law, shared above. Only after all debts have been settled can you turn to the task of distributing the remaining assets to beneficiaries.
Get Help with Virginia Estate Administration
An experienced Virginia Estate Administration Attorney from Promise Law can help you review estate debts and file any disputes necessary. Their expertise and knowledge of Virginia law is invaluable in complex debt claim matters.
If you’re unsure what you need or where to begin, contact an estate administration lawyer for a free consultation with our paralegal. You may also want to take advantage of our Probate & Estate Administration Workshop.