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A Discussion About Probate, Part III: What Happens When A Love One Dies?

Posted by Judy Nakashima Shoji | Feb 04, 2021 | 0 Comments

This article is the third part of a three-part series on probate. You can read Part I here and Part II here.

Paying the Decedent's Debts, Tax Returns, and Distributing the Estate

If someone dies owing a debt, does the debt go away when they die? No. Generally, the deceased person's estate is responsible for paying any unpaid debts. The estate's finances are handled by the personal representative, executor, or administrator. That person pays any debts from the money in the estate, not from their own money.

Generally, no one else is legally obligated to repay the debt of a person who has died, unless the following situations occur:

  • If there was a co-signer on a loan, the co-signer owes the debt
  • If there is a joint account holder on a credit card, the joint account holder owes the debt
  • If there is a surviving spouse and state law requires the spouse to pay
  • In community property states such as Washington State, the surviving spouse may be required to use community property to pay debts of a deceased spouse

Identifying and paying decedent's debts:

The decedent's creditors must be identified and notified of the death. Washington State does not require the executor to publish notice of the death in a local newspaper, but the executor is required to act with reasonable diligence to identify all creditors.

The executor should make a complete list of the decedent's liabilities. Bills and statements you should look for include:

  • Mortgages
  • Lines of credit
  • Condominium Fees
  • Property taxes
  • Federal and state income taxes
  • Car and boat loans
  • Personal loans, including student loans
  • Storage fees
  • Loans against life insurance policies
  • Loans against retirement accounts
  • Credit card bills
  • Utility bills
  • Cellphone bills
  • Medical bills

Valid creditor claims are then paid. The executor will use estate funds to pay all the decedent's debts and final bills, including those that might have been incurred during their final illness.

Preparing and Filing Tax Returns

The executor will file the decedent's final personal income tax returns for the year they died. They will determine if the estate is liable for any estate taxes, and, if so, file these tax returns as well. Any taxes due are also paid from estate funds.

Distributing the Estate

When all these steps have been completed, the executor can distribute what is left of the decedent's assets to the beneficiaries named in the will without a court order if they were given non-intervention powers. If they were not granted non-intervention powers, distributing the assets will require the court's permission, which is typically only granted after the executor has submitted a complete accounting.

If the will includes bequests to minors, a probate guardian ad litem will be required and appointed by the court. In other cases and with adult beneficiaries, deeds and other transfer documents must be drawn up and filed with the appropriate state or county officials to finalize the bequests.

If you need assistance understanding how to pay the decedent's debts, file tax returns, and distribute the estate, reach out to us today. We can help.

About the Author

Judy Nakashima Shoji

Judy prides herself on being approachable, down to earth and willing to answer any questions hr clients may have. She is a Seattle native. She attended the University of Washington, Tokyo University and Seattle University School of Law. She was a legal intern in the Civil Division of the Seattle City Attorney's Office and at Yasuda Fire and Marine Insurance Company located in Shinjuku, Japan. Judy advises clients in all aspects of estate planning, probate and adoptions. She also serves as a Title 11 court appointed investigator in guardianship cases for King County Superior Court. She cannot think of any areas in which she would rather practice. She invests in learning about her client's whole story which creates a friendly environment in which she can provide more effective assistance. Her goal is for her estate planning clients to walk away with a customized, detailed, realistic, and clear estate plan which will accomplish their wishes. Estate planning can be uncomfortable and confusing and her goal is to explain complicated legal options in a way that is easy to understand and clear. Her desire is to provide peace of mind and clarity for her clients while also giving them the information necessary to make well informed decision. Judy has been a member of the Elder Law and Real Property and Trust sections of the Washington State Bar Association and King County Bar Association. She has been a volunteer attorney with the King County Bar Association Neighborhood Clinic and Pro Bono Services for the past 14 years where she was recognized as volunteer of the month in October 2014. Judy is married with three children. Outside of work she enjoys traveling to sunny locations, exercising (HIIT and barbell classes keep her grounded) and spending time with the people (and animals) she loves.

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