Once the probate process begins, the administrator has a responsibility to pay estate expenses. There are 6 basic types of estate expenses, each of which must be repaid with estate property. The types of expenses and the time in which they must be repaid differ by state, so consult with an experienced probate attorney if you need assistance.
Type 1: Funeral Expenses. When a person dies, the money used to pay for the funeral often comes from the surviving spouse or various other sources. These expenses are often repaid even before the will is probated. Regardless of the status of the will, they typically have top priority and are first to be repaid by the administrator.
Type 2: Administration Expenses. It costs money to administer an estate, and the administrator is entitled to recover the costs and fees due to him or her. Administration fees also cover attorneys fees incurred for the probate process or any litigation associated with it.
Type 3: Taxes. The administrator must pay federal and state estate or inheritances taxes. Federal taxes get paid first, then state taxes. Taxes can also include unpaid income or property taxes.
Type 4: Medical Expenses. If the decedent incurred medical expenses in his or her last illness, these get paid next. The expenses must have been incurred as a part of the decedent’s final illness, meaning the medical condition that led to or caused his or her death.
Type 5: Debts as dictated by law. State laws establish which creditors receive priority.
Type 6: Remaining debts. Any other debts not addressed by law are dealt with last.