Someone whom you love recently died, and now you have the job of handling their estate. You are not just a beneficiary but also their executor.
While you stand to receive some of the property from the estate, you first have to file paperwork with the probate courts and fulfill your other obligations as executor. Both debts and taxes can impact how much property remains in the estate to pass out to beneficiaries, including yourself.
What taxes and debts will likely affect estate assets?
Estate taxes are often less of a concern for people in Texas
The federal government and certain individual states levy taxes against the app that people leave behind when they die or those inherited with those assets. Thankfully, Texas is not one of the states that have their own estate and inheritance taxes. The estate will only be subject to federal inheritance taxes, which only start accruing with a total estate value of over $11 million.
However, there may be other taxes that could apply to the estate and require payment before you distribute property to any of the beneficiaries. The estate itself might have income if you have to sell assets to distribute their value among heirs. You may also have to pay income taxes on behalf of the deceased party when you file their final tax return. It’s crucial to recognize these liabilities and retain enough assets to meet them.
Any valid debt can diminish the value of the estate
Debts ranging from credit cards and student loans to unpaid medical bills can drastically diminish what assets someone has in their estate to give to the people they love. Under Texas probate rules, executors typically have to notify creditors about probate proceedings. They have to wait to begin distributing property until after creditors have had an opportunity to make a claim against the estate.
As the executor, you must follow these rules, or you might be personally vulnerable to creditor claims as executor if you distribute property from the estate prematurely. Making sure that you address all packs and debt liabilities before you start handing out assets during estate administration will help you protect yourself as the executor doing all of the work.