Overcoming Personal and Legal Challenges

Overcoming Personal and Legal Challenges

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What debts may an estate pay during an Alabama probate process?

The personal representative named in a will has the responsibility of notifying the deceased’s heirs and creditors of the death. The Alabama Medicaid Agency’s website notes that its office must also receive a notice if the deceased relied on Medicaid.

Medicaid’s Estate Recovery Unit may file a claim against the estate with the probate court no later than 30 days from when it received a notice of death. In some cases, Medicaid may recover the amount that the agency spent on providing medical care for the deceased.

Who has a responsibility to pay mortgages, credit cards and loans?

Individuals who die with debts owned jointly with their spouse or heirs may pass on the unpaid balances to the surviving account owner. As noted by Credit.com, a mortgage may go to the beneficiaries listed in a will. An heir may assume the rest of the loan’s payments, especially when taking ownership of an inherited home.

Joint credit card accounts become the responsibility of the co-owner. When dying as a single account owner, creditors may file claims to recover the balance. An estate may use its assets to pay off credit card debts and personal loans. If the deceased dies with a car loan, the estate may pay it off and then transfer ownership of the vehicle to its heir.

May personal representatives file and pay any taxes owed?

As noted by SmartAsset, Alabama does not levy estate taxes. The federal government, however, may impose estate taxes of up to 40% on estates valued at least $12.92 million. The estate’s representative must file and settle the deceased’s final taxes before distributing assets to heirs.

Personal representatives may negotiate debts with lenders and creditors. The language in a will could also help protect assets and properties from future claims.