Your goal is to have paid off all of your debts by the time you pass away. You make a good living, so you know that it’s possible with the right planning. There is plenty of money to get things taken care of properly.
But you also know that there are going to be some debts that you simply can’t address in advance. For example, perhaps you’re still working, and so you’re going to have to deal with income taxes at the end of the year – which you may owe. Or maybe you have property taxes that are going to be due at the end of the year. Other examples could be making final payments to utility companies, paying off subscriptions or owing taxes based on investments that increased in value.
Someone has to address these types of debt after you pass away, so who is going to do it? Who pays?
The job of the estate administrator
The job of paying off these final debts usually falls on the estate administrator. This is not their only job. They also inventory your assets, distribute them, read the will, pass out copies of the will and do much more on your behalf. They are in charge of ensuring that your estate plan is actually followed.
When the estate administrator has to pay your debts, though, they don’t have to worry about this becoming a financial burden for them. They’re not responsible in any sort of fundamental way. They just take money from your estate, pay the debts, and then distribute the rest of the money to your heirs.
It’s important to have all of this set up in advance, so be sure you know what steps to take to make your estate plans work for you and your family.