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  4.  » What may require an estate to pay the deceased’s debts?

What may require an estate to pay the deceased’s debts?

On Behalf of | Jul 20, 2023 | Probate, Trust & Estate Administration

Ohio’s Revised Code gives creditors six months to file claims to recover the deceased’s unpaid debts from the estate. During probate, the estate’s administrator may work with creditors to settle outstanding balances.

In some cases, an executor may sell property and use the proceeds to pay valid claims, which may include judgments and lawsuits. If an estate does not have sufficient assets to settle all debts, the Buckeye State’s probate laws provide an order of priority regarding who could recover payments.

Who may get paid under Ohio’s priority of claims?

As noted on the Ohio.gov website, the estate first pays for the probate procedure and the administrator’s expenses. Up to $4,000 may also go toward the deceased’s funeral or burial costs. The estate may pay off bills for the deceased’s end-of-life medical care, but only after paying taxes.

As described on the IRS.gov website, the estate’s administrator must file and pay the deceased’s final tax returns. The administrator may also use the estate’s assets to pay any previous years’ outstanding tax debts. If the deceased owned a business, its assets may also go toward paying outstanding payroll or excise taxes.

How may creditors with valid claims get paid?

Experian notes how the estate may pay both the deceased’s secured and unsecured debts. Lenders with secured debts such as mortgages and auto loans may foreclose on property or repossess cars. Creditors holding unsecured debts may also file claims against the estate. Unsecured debts typically include credit cards and personal loans that did not require collateral. Secured debts generally take priority in getting paid.

Forward-thinking estate planning may include giving consideration to how an estate will pay all of its valid debts. Large tax liabilities and medical bills could leave an estate with insufficient assets to repay secured and unsecured loans.

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