Handling a loved one’s estate can become stressful when the bills add up to more than the estate owns. You may worry that creditors will expect you or other family members to cover the difference. In Kentucky, relatives generally do not become personally responsible for a deceased person’s debts simply because they are beneficiaries. Instead, the estate generally pays valid debts from its available assets. When there is not enough to cover everything, Kentucky law determines which expenses and claims come first.
Which bills get paid first?
A personal representative cannot simply pay creditors in the order that bills arrive. When an estate does not have enough assets to cover all valid claims, Kentucky law sets an order for payment. In general, that order includes:
- Costs and expenses of administering the estate
- Funeral expenses
- Certain debts and taxes that receive legal priority
- Other valid claims against the estate
Creditors in the same group generally have the same priority. Following this order becomes especially important when there is not enough money for everyone. The amount available may also affect what happens to property in the estate.
Could estate property be sold?
An estate may include a house, vehicle or other valuable property but have little cash available for bills. Depending on the circumstances, some estate property may need to be sold to provide money for valid expenses and debts.
Even if certain property is left to a beneficiary in a will, the estate may still need to address its legal obligations before making distributions. As a result, beneficiaries may receive less than they expected.
What happens when the money runs out?
If the estate cannot cover every valid claim, lower-priority creditors may receive only part of what the estate owes or nothing at all. Simply handling the estate generally does not mean you must cover unpaid debts with your own money.
Beneficiaries receive distributions from what remains after the estate addresses required expenses and valid claims. If those obligations and any applicable allowances use the available estate assets, there may be little or nothing left to distribute.