How Does an Estate Deal with Bills and Taxes?

Do you ever wonder what happens to all of your bills when you pass away?  What about your taxes? Do you still owe the government after you die?  

As experienced probate attorneys, we at Doane & Doane have heard it all when it comes to client questions and stories about what happens to an estate after someone passes away.  We have heard people suggest that if you die without a will, the State of Florida would get all of your assets. We have also come across those who think that all of your debts are erased when you pass away, or even that your relatives and beneficiaries are liable for your debts after you die.  

Be assured that those are myths.  There are many wrinkles and details when it comes to the law of probate and what happens to assets in an estate after a person passes away.  Having handled countless probate cases, we at Doane & Doane are ready and able to give you sound, solid legal advice with regard to how probate matters are handled in the State of Florida.  We are Palm Beach probate attorneys with a proven track record of success in making the probate process as painless as possible for our clients and their families. 

In this article, we will take the opportunity to tackle two important questions related to probate.  First, we will discuss how creditors – those who are looking for the estate to pay any outstanding bills and debts – are handled in probate.  Then, we will talk a little about how an estate will deal with taxes and the Internal Revenue Service.

If you are in a place where you need advice and representation regarding a probate matter, then we welcome you to call us at Doane & Doane today.  One of our primary practice areas is probate law, and we are the Palm Beach probate attorneys who can help you take care of a probate matter in the State of Florida.  Call us today at 561-656-0200.

As you may know, one of the main reasons we have probate law in this country is to make sure that the debts of someone who passed away are paid in an effective and orderly way.  The personal representative who is in charge of administering an estate has the responsibility to be diligent in making sure that “known or reasonably ascertainable” creditors are made aware of a probate proceeding through actual notice.  With that notice, creditors to an estate will have the chance to file a claim or claims in the decedent’s probate estate. 

Upon receiving notice of a probate administration proceeding, creditors typically have three months to file a claim with the clerk of the court in the circuit court where the proceeding is taking place. 

Once the personal representative receives that claim, he or she (or any other interested person) can file a formal objection to the claim.  The creditor, in response, then must file another lawsuit, separate from the probate administration proceeding, to continue the claim.  

While the creditor’s claim is being adjudicated, the creditor should be treated fairly, and as a person with a legitimate claim in the estate.  

Yes.  The decedent’s debts that are legitimate – those that include proper creditor claims, taxes, and the costs and expenses of administering the decedent’s estate – must be paid before any monies or assets are distributed to the beneficiaries of the decedent.  In fact, the personal representative must inform the court of all claims filed in the probate estate and their status.  The court also will not allow the estate in probate to be closed until those claims have been paid or otherwise properly resolved.

With regard to taxes, a person’s death has two major consequences for tax purposes.  First, it ends the decedent’s last tax year for federal income tax purposes. Second, it marks the creation of a new tax entity – the decedent’s “estate.”  

The personal representative also has specific obligations with regard to tax filings.  Specifically, the personal representative must file a final Form 1040 for the decedent and a Form 1041 that reports the estate’s taxable income.  

Although the personal representative is responsible for filing certain tax documents, he or she is not responsible for the actual tax debts.  Yet, a personal representative might be held personally responsible if he or she fails in the obligation to pay certain taxes for the estate.  

Whether it is assistance to administer an estate or assist an appointed personal representative, you should engage the help of the probate attorneys at Doane & Doane.  

Florida fiduciaries seek the assistance of the attorneys of  Doane & Doane, P.A. to administer and manage their trusts and estates frequently.  The founding partners of Doane & Doane are board-certified West Palm Beach Probate Attorneys.  With the additional advantage of certified public accountancy in their backgrounds, they present a unique combination of skills and experience which enables them to effectively settle, administer, and manage clients’ trust and estates.

Overseeing an estate can be a time-consuming and complicated process. We help clients every step of the way. Our probate administrative services include:

1. Proving in court that a deceased person’s will is valid
2. Identifying and inventorying the deceased person’s property
3. Property appraisal
4.  Supervising and arranging the estate’s debts and taxes
5.  Distributing property as directed by a will
6.  Transferring title and ownership of assets to the proper beneficiaries

In addition, the personal representative, executor, or executrix must follow Florida law to conclude the decedent’s affairs, including:

1. Giving the proper notices to proper parties
2.  Collecting the decedent’s property
3. Receiving claims against the estate
4. Paying valid claims and disputing others
5. Distributing estate property
6. According to the will or state law
7. Selling estate property to cover debts or allow for proper distribution, if necessary

Let us at Doane & Doane help serve as a personal representative. Contact a Doane & Doane professional today by calling 561-656-0200 .

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