If you’re planning your estate, it’s important to understand that some expenses must be paid before your beneficiaries can receive their inheritance. In Georgia, certain costs—like funeral expenses, debts, and taxes—take priority and must be settled first. Knowing which expenses are paid before your beneficiaries can receive their share can help you create an estate plan that protects your loved ones from unexpected delays or deductions.
1. Funeral and Burial Costs
One of the first expenses your estate covers is the cost of your funeral and burial or cremation. These can range widely based on the type of services chosen. Many people include funeral expenses as part of their estate plan or purchase funeral insurance, ensuring that these costs are paid before your beneficiaries receive any assets.
2. Administrative Costs
Administrative expenses refer to the costs of managing and settling the estate. These expenses may include
- Executor or administrator fees for managing your estate
- Legal fees for attorneys handling probate
- Court costs and filing fees for probate proceedings
- Appraisal and valuation fees for any property within your estate
Executors or administrators may be compensated from the estate as outlined in Georgia’s probate laws, and these costs are typically prioritized before beneficiaries receive their inheritance..
3. Debts and Taxes
Any outstanding debts of the deceased must be paid before distributions can be made. This may include:
- Mortgages or secured loans: Any remaining mortgage debt must be addressed before distributing property.
- Credit card debt and personal loans: Unsecured debts also take priority.
- Medical bills and final healthcare expenses: Unpaid medical bills are settled by the estate.
- Federal and state taxes: Federal estate taxes may apply to high-value estates, though Georgia does not impose a separate state estate tax. Any outstanding income taxes or property taxes must also be paid before your beneficiaries receive any distributions.
Settling debts and taxes is a crucial part of probate, as these obligations are legally required to be paid before your beneficiaries receive their inheritance.
4. Family Support Allowances
In Georgia, the probate court may approve a year’s support allowance, which allows the surviving spouse and minor children to receive a portion of the estate’s assets for living expenses. This allowance has priority over most other claims against the estate and can impact what remains for beneficiaries. Georgia’s year’s support statute is designed to ensure that dependents receive the support they need before assets are divided among beneficiaries.
5. Claims from Co-Owners or Heirs
If the deceased co-owned property or had obligations to heirs under a prior agreement (such as a prenuptial contract or community property rights), these claims are typically paid before your beneficiaries inherit assets. For instance, if you co-own real estate, any remaining obligations must be settled before distributing the property to beneficiaries. Similarly, prenuptial agreements or community property laws can lead to certain claims that impact how much remains for your beneficiaries.
Understanding these priority expenses ensures that your beneficiaries are aware of what’s involved and allows you to make financial arrangements accordingly. A well-structured estate plan can help streamline this process, often protecting your assets from being exhausted by these expenses. With appropriate planning tools, such as trusts or designated funds, you may be able to cover anticipated expenses without affecting the inheritance designated for your beneficiaries.
For guidance in planning an estate that accommodates these priority expenses while maximizing what remains for your beneficiaries, contact our experienced estate planning attorneys at Grissom Law Firm for comprehensive estate planning advice.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.