When someone passes away, their family often wonders when they will receive their inheritance. Many people assume that heirs receive assets right away. What they are not aware of is that the estate must pay certain debts and expenses first. In Kentucky, probate law sets strict rules about which bills come first.
What expenses come first in Kentucky probate?
Before paying any debts, Kentucky law protects the immediate family. A surviving spouse or children can usually claim a $30,000 exemption from the estate. The estate sets aside this money before most creditors can touch it.
After that, the estate must cover preferred claims. According to Kentucky statute, the law gives top priority to:
- Costs of administration: This includes court filing fees, executor’s fees and attorney’s fees.
- Funeral expenses: The costs for the service and burial.
- Debts and taxes with preference: This includes federal taxes and specific state tax liens.
Next, the estate must pay secured debts. This type of debt ties to a specific piece of property. For example, a mortgage ties to a house and a car loan ties to a vehicle. If the estate does not pay these loans, the lender may take back the property.
How the estate handles other debts
After paying the high-priority bills, the estate addresses unsecured debts. These include credit cards, medical bills and personal loans. In Kentucky, creditors generally have six months from the date a personal representative takes office to file a claim. If they miss this deadline, they may lose their right to payment.
If the estate does not have enough money to pay everyone, the law sets the order of payment. The executor cannot just pick and choose which bills to pay. If the money runs out, heirs may receive less than expected or nothing at all.
Luckily, heirs usually do not pay these debts with their own money. The estate pays valid debts before giving anything to the family. Speaking with a Kentucky probate attorney can help you understand these rules and reduce stress during a difficult time.