When a loved one passes away, one of the last things you want to worry about is unexpected debts. However, during the probate process, it’s common to discover liabilities you didn’t know about.
These can add anxiety and confusion during circumstances that are already stressful. Understanding how to manage these debts is important to ensure the probate process goes well.
Identifying and verifying debts
Start by reviewing the deceased’s financial records, including bank statements, credit card bills, and any correspondence that might indicate outstanding debts. It’s important to be thorough, as some debts may not be immediately obvious.
Once you’ve identified potential debts, verify them by contacting the creditors. Make sure the debts are legitimate and that the amounts are accurate. Keep records of all communications and documents relating to the debts. This will help ensure you get a clear understanding of the estate’s obligations during probate.
Prioritizing and paying debts
You must now prioritize these obligations. The reason is that Texas probate requires you to pay certain debts before all others. For example, funeral expenses, taxes, and secured debts like mortgages typically take priority. Understanding which debts you have to care for first will help you manage the estate’s assets effectively.
Unfortunately, the estate might not have enough assets to cover all the debts. The common term for this is an “insolvent estate.” In these cases, the creditors may have to settle the debt with you for less than the full amount. In such cases, be sure to prioritize the debts according to Texas probate laws.
By carefully identifying, verifying, and prioritizing debts, you can manage unexpected financial obligations during probate. The sooner you take action, even before the passing of a loved one, the smoother the process can be for your family during a difficult time.