How will the debts of the decedent affect the beneficiaries?

The debts of the decedent are paid from the assets of the estate prior to any distribution to the beneficiaries. Debts are generally paid from the entire estate not from any beneficiary’s shares. However, payment of the decedent’s debts will decrease the amount left to be distributed to the beneficiaries.

Some debts, including a mortgage, could be addressed in a will or trust. For instance, the estate trustee or executor might be instructed to pay the remaining balance on the mortgage, and then transfer the property to a specific beneficiary free of the mortgage. Another possibility is that the real property could be sold, the balance of the mortgage paid, and the rest of the proceeds of the sale transferred to a beneficiary.

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