At many points in your Executor.org custom plan, you will see that we emphasize communication. Good communication with the probate court, with the estate attorney, with the beneficiaries, etc. can help executors complete their duties as quickly and easily as possible.
What if the deceased has debts that must be paid, eating into the money they left to their beneficiaries?
When gifts to beneficiaries in a will have to be reduced to pay an estate’s debts, this is called “abatement.” While no reduction in what a beneficiary receives through a will is easy, it becomes even harder when the reduction is not just of a monetary amount, but instead is of personal property or real estate.
Sometimes it is easier for a beneficiary to come to terms with having less money coming to them in a check than having to see the family home they grew up in sold to pay debts so that they only keep the contents and not the house itself.
When an executor has to share this difficult news with beneficiaries, it can often be helpful to have the estate attorney present to help answer questions about the laws and explain why this has to happen. An estate attorney can also help explain the order in which assets will be taken to pay debts vs. distributed to beneficiaries.
And it is often best to tell beneficiaries as early as you know that this might happen. Open and honest communication about the estate can be helpful for the executor in these situations.
As the executor and estate attorney explain the need for abatement, it can be helpful to remind beneficiaries of non-probate assets. If the executor knows a beneficiary has received the assets from non-probate assets like the money in payable-on-death bank accounts, retirement accounts, etc. it is worth a reminder to that person that those non-probate assets are theirs to keep because it is not tied to the estate–that is not an estate asset.
Communication between the executor and the beneficiaries is always important, but especially so when the estate assets are subject to abatement. This communication is an important part of the executor role.