Often, when Nevada residents think of closing an estate, they think of distributing the decedent’s assets to remaining loved ones. While this action is part of probate, the process does not focus solely on the assets of the estate. In fact, the executor will need to ensure that he or she properly addresses the remaining debts of the estate as well.
Handling someone else’s debt is not an easy task because it is not always immediately clear who is owed something from the estate. The executor will need to gather records of outstanding debts and notify creditors about the person’s passing. At that time, the creditors can make claims against the estate in efforts to receive at least a portion of what they are owed.
It is important to note that debts are paid through the remaining funds and assets of the estate and typically do not come out of the pockets of surviving loved ones unless a person is also associated with the debt, such as a co-signer on a loan. Still, paying debts out of remaining funds could mean that surviving family members will receive a lower inheritance than expected unless the assets are not included as part of the estate, which could include payable-on-death accounts such as:
- Retirement accounts
- Brokerage accounts
- Life insurance policies
- Other payable-on-death accounts with named beneficiaries
It is also essential that the executor handles the debts associated with the Nevada estate before distributing any assets to heirs or beneficiaries. If assets are distributed too early, there may not be enough funds left to cover necessary debts, which could result in the executor being liable for the outstanding balances. Because the order of events and other details of probate are crucial to understand, having professional legal help during this process is often beneficial.