Three Financial Obligations That Can Diminish Someone’s Legacy

During the Arizona probate process, family members and individuals named as beneficiaries in the deceased’s estate planning paperwork can become the legal owners of property that previously belonged solely to the decedent.

A testator who has created an estate plan could name anyone that they care about as a beneficiary set to receive some of their property. If someone does not create a will or other testamentary estate planning paperwork, then their spouse, children and other closest family members would likely inherit their property when they die per state intestate laws.

Before immediate family members or selected beneficiaries inherit anything, however, the estate will need to pass through the Arizona probate courts in most cases. There are certain expenses that could diminish what beneficiaries actually receive from the estate. The following financial obligations must generally be taken care of before the right of beneficiaries to inherit from the estate may be honored.

Taxes owed by the testator or estate

There are some tax responsibilities that will still be due when someone dies, possibly including income taxes owed from their last year of life. The estate will have to file paperwork to settle someone’s tax responsibilities and use State resources to pay those tax obligations. Even estate taxes owed by those with millions in assets will take priority over the inheritance rights of family members and selected beneficiaries.

Valid personal debt

From credit card balances and student loans to the cost of someone’s end-of-life care, there are many debts that could transfer to the estate at the time of someone’s passing. The estate will need to use someone’s remaining resources to pay those debts. In some scenarios, the debts owed by the decedent will consume the property that they would have liked their family members to inherit.

Estate administration costs

Probate court proceedings and legal representation cost money, and the estate will have to pay those expenses before it uses what remains for the benefit of specific individuals. Particularly when beneficiaries fight over someone’s property, probate costs can have a significant impact on the final total value of the estate.

It is only after settling major expenses and paying necessary debts that the person tasked with estate administration can distribute belongings and financial resources to the beneficiaries chosen by the testator in question. Understanding what obligations have priority may benefit those hoping to inherit from an estate and those managing one on its way through probate court.