An estate typically consists of all valuable property that belongs to an individual at the time of their death. Either those named as beneficiaries in an estate plan or heirs with the statutory right to inherit eventually received most of the property that belongs to a person.
However, probate proceedings can diminish what heirs or beneficiaries inherit. The personal representative overseeing estate administration must fulfill the financial obligations of the decedent. The process of doing so can significantly reduce the overall value of the estate.
What obligations take priority?
State statutes impose a specific order in which personal representatives should handle financial obligations. Estate administration expenses are a top priority. The law also allows for baseline financial support for the surviving spouse and/or children of the decedent. Taxes and invoices for end-of-life medical care are also priorities.
Even unsecured debts, such as credit cards, take precedence over the final distribution of resources to heirs or beneficiaries. What people actually inherit can be substantially lower than the initial value of the estate.
Thorough estate planning can help address liabilities while preserving resources for loved ones. Proper support throughout the estate administration process can help protect personal representatives from the liability that could follow errors when managing estate resources.
Learning about state statutes for probate proceedings can be beneficial for those planning for the future and those with an interest in an estate. Those who are aware of the financial impact of debts and taxes can reduce their exposure during probate proceedings or plan in advance to optimize what their loved ones will inherit.