Who Gets Paid First From An Estate?
When someone you love passes away, chances are that your inheritance is not the first thing on your mind. However, as the months pass by and you either lack access to assets, such as a home or the sale proceeds from the sale thereof, or financial accounts, and wait to receive a distribution from the estate or trust, , you may become eager to find out what is taking so long and where your inheritance lies on the list of priorities involved in settling an estate.
Order of Distributions from an Estate
The process of settling and distributing an estate can be somewhat complex and time-consuming. When someone passes away , an estate that must be settled. A Personal Representative will be appointed by the probate court to handle the administration of the estate. This involves settling their estate by marshalling assets, paying debts and funeral expenses, and maybe even filing an estate tax return before distributing the remaining assets to beneficiaries. What that means is that beneficiaries are essentially last on the list of people to receive a distribution from the estate. There are also classes of beneficiaries, with the residual beneficiaries being paid last. If the decedent left specific monetary gifts to a person or class of individuals, for example, $10,000.00 to each grandchildren, then each living grandchild will be paid prior to the residuary beneficiary.
Before the Personal Representative gets to the distribution of specific gifts and the gifts to residuary beneficiaries, the Personal Representative must settle or pay all debts and liens on the decedent’s property, as well as pay any property and estate taxes. In fact, the executor is required to diligently investigate whether there are any outstanding debts and ensure the creditors are paid. The executor is often also required by state law to publish a notice of the testator’s death so that creditors, such as credit card companies, can pursue any outstanding debts. For that reason, creditors will be the first to be paid from the testator’s estate, followed by the state and IRS. Next, attorney’s fees will be paid, as well as the fee for the Personal Representative’s services, and any other necessary services, such as appraisers and accountants who were hired to work on the estate. After all debts and administrative expenses have been paid, the remaining assets will be distributed to the testator’s heirs in accordance with their will. . If the testator does not have a will, or if their will was successfully challenged or determined to be otherwise invalid, then their remaining assets will be distributed in accordance with the state’s intestate succession statutes.
How Does Intestate Succession Work?
Regardless of whether you have a will (original or a copy thereof), if you have any assets owned in your name alone, these assets will pass through probate. If you have a will, it will need to be determined to be valid by the probate court. If the will is not valid, or if there is no will, the Massachusetts intestate succession statutes will determine how any remaining assets will be distributed after the testator’s estate has been settled. Under intestate success, the assets will first go to the decedent’s spouse if they have one. If they have children from a previous relationship, their assets will be split between their spouse and children. If they do not have a spouse or children, their assets will go to their siblings. If they do not have siblings, their assets will go to their parents.
Contact Fisher Law, LLC
If you would like assistance planning your estate or challenging a will, the experienced Norwood estate attorneys at Fisher Law, LLC are ready to help. Contact us today to schedule a consultation.