Washington Probate: Paying the Decedent’s Debts, Tax Returns, and Distributing the Estate

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.

STAY UP TO DATE

Subscribe to our newsletters

 
Subscribe to one or more of our newsletters, delivering meaningful insight on topics that matter to you and your family.

FURTHER READING

Latest Blog Posts

As a Seattle entrepreneur, you’ve undoubtedly dedicated countless hours and resources to building a successful business. You’ve dotted all of your I’s and crossed all of your T’s. But have you considered what will happen to your business after you're…

In today’s world of fast-paced decision-making and on-demand solutions, such as DIY divorces, it is not surprising that many couples contemplate divorce the moment they find themselves unhappily married. Our culture’s fickle mentality often seems to advocate for the idea…

In the wake of divorce or separation, co-parenting can feel stressful. Not only have you just gone through an emotional experience, but you are also now trying to figure out how both you and your co-parent can spend time with…

Far too many families end up fighting, or at least experiencing tension, over a family inheritance, but it does not have to be that way. Having counseled families for years, we offer the following advice to help your family avoid fighting over your property — while you are here and after you die.

If you are getting divorced, you may be worried about what it will do to your finances. Maybe your finances are heavily intertwined with your spouse’s, or you are worried about what your future will look like, given these changes.…

Establishing paternity and parentage is important for many families and parents. Regardless of why you want to establish paternity and parentage, the process has the potential to be confusing, especially if you are unfamiliar with the terms and rules for…

After divorce, you may find yourself living on one less stream of income than you did when you were married and want to find a way to make up for it. Or even if you didn’t lose any income by…

If you are in the process of getting remarried, a prenuptial agreement may be the last thing on your mind. It should be at the forefront of it, however, as it can be beneficial for you, your spouse, and, if…

As a mom of four (now adult) kids, I remember well the flood of emotions that came each time they went to my ex’s, especially during the early days of my separation and eventually after my divorce. Not only was…

The holidays can look much different during a divorce than they did only a year earlier, and the changes can take some getting used to. The challenge is that you have to start somewhere, and in these “newer” moments, it…