March 3rd, 2023
If you were named as the executor or administrator of a deceased person’s estate, you might wonder who gets paid first in probate.
While the deceased person’s Last Will and Testament provides a general guide, probating an estate is not always a simple process, and there can be many complicating factors.
Probate is the legal process of taking an inventory of and distributing a deceased person’s assets. This will include finalizing their affairs, paying off any debts, and distributing the remaining assets as directed by the Will or, if the person died without a Will, according to the laws of intestacy.
A properly-drafted Will should identify who inherits specific assets and the remaining value of the estate. It should also direct the estate executor to pay off any estate debts and funeral and burial expenses, and pay any taxes owed. But the specifics of determining who to pay and how much are not always clear.
To ensure that creditors and taxes are paid by the estate executor, Nevada probate laws specify the order in which debts are to be paid. This ensures that the executor does not distribute all the assets to the heirs and beneficiaries before running out of money to pay creditors and taxes.
Pay Debts and Taxes Are Paid First in the Probate Process
After the executor has taken an inventory of the estate, but before estate assets are distributed to heirs and beneficiaries, the estate executor must identify any debts the estate owes. In Nevada, creditors have a specific amount of time to present claims against the estate. These claims often include medical and utility bills, taxes, and funeral and burial costs.
If the value of the estate is less than $300,000, creditors have 60 days to file a claim. If the estate is worth more than $300,000, creditors have 90 days. Claims that are not filed within the prescribed time period are forever barred. These deadlines are strictly enforced.
In some cases, the executor will need to liquidate assets to satisfy estate debts. This might mean selling certain items, like jewelry, vehicles, or stocks. An executor is not required to liquidate non-exempt assets (i.e., assets that pass outside of probate), such as retirement accounts and life insurance policies.
The estate executor should also prepare, file, and pay the deceased person’s last tax return, state and federal inheritance taxes, and any estate taxes that are due.
Once the executor has paid debts and taxes, the residue of the estate is distributed according to the terms of the Will or, if the person died without a Will, according to the laws of intestacy.
Order of Priority for Paying Estate Debts
Under Nevada law, debts and charges of an estate are to be paid in the following order:
- Expenses of administration.
- Funeral expenses.
- The expenses of the last illness.
- Family allowance.
- Debts having preference by laws of the United States.
- Money owed to the Department of Health and Human Services as a result of the payment of benefits for Medicaid.
- Wages to the extent of $600, of each employee of the decedent, for work done or personal services rendered within 3 months before the death of the employer. If there is not sufficient money with which to pay all such labor claims in full, the money available must be distributed among the claimants in accordance with the amounts of their respective claims.
- Judgments rendered against the decedent in his or her lifetime, and mortgages in order of their date. The preference given to a mortgage extends only to the proceeds of the property mortgaged. If the proceeds of that property are insufficient to pay the mortgage, the part remaining unsatisfied must be classed with other demands against the estate.
- All other demands against the estate.
What If the Estate Does Not Have Enough Money to Pay the Debts?
When a person dies with more debts than assets, the estate is considered insolvent. In this case, the executor may need to sell non-exempt assets to pay any outstanding debts. The estate heirs and beneficiaries may not receive a distribution from the estate because their priority is lower than that of the debtors and creditors.
While the executor is responsible for ensuring that estate debts are satisfied, in most cases, the executor and other family members are not personally responsible for satisfying estate debts. Unless you were a co-signer or a joint-owner of property, you are likely not personally responsible for estate debts.
The Vander Laan Law Firm: Personal Service. Peace of Mind.
Handling probate as the executor of an estate can be a confusing and complicated process. Nevada probate attorney Natalia Vander Laan can help by answering your questions and guiding you through the probate process.
Natalia explains complex estate administration concepts in plain language so her clients understand the details of what is happening. Her clients find that she is patient and understanding and has a thorough knowledge of Nevada probate law.
If you have been named as the administrator or executor of an estate in Nevada and have questions, the Vander Laan Law Firm can help. Contact the Vander Laan Law Firm today to schedule a confidential consultation to discuss your situation.