Who pays your taxes for your estate?

On Behalf of | Aug 8, 2022 | Estate Planning

Making an estate plan may start with deciding who gets which assets, but it goes beyond that. You also need to pick a personal representative who is going to handle the estate for you. The main job that this person has is to read your will and carry out whatever it instructs. They’re the person who’ll inventory your assets and then pass those assets on to the intended heirs.

But your estate is also going to have some debts that must be considered. You may have a mortgage that still has to be paid. You may owe property taxes at the end of the year, or you may owe income taxes. Who is going to deal with all of these costs, which lower the value of the estate?

Your personal representative can make these decisions, as well

The good news is that you can give your personal representative the ability to make all of these decisions and carry out these duties. They can collect your assets and also take inventory of your debts, and then they can use those assets to pay off the amount of debt that can be absolved. 

For most people, this means that the debt gets taken care of quickly at the beginning, and the rest of the assets are divided. But there is a chance that your estate could have more debt than assets. This does not mean that your estate’s personal representative is going to have to pay themselves. They simply have to pay what can be afforded by the estate. But that may mean that people in the will don’t get as much money if more than expected had to be used for taxes and other costs.

You can see how important it is to consider all aspects of estate planning, so make sure you think through your plan thoroughly and consider all of your legal options.