If you are the executor of a probate estate you may have paid, or will pay, certain bills or expenses out of your pocket.
After someone passes away their bank accounts are usually frozen and Arkansas law states that you should not spend estate funds until a probate is opened or without approval from the Court.
But does that mean bills and expenses incurred can just go unpaid? Usually not.
Which Expenses Incurred are Able to be Reimbursed?
The first expenses, a large one, are funeral expenses and burial costs.
In most cases there are also mortgage payments to be paid, or a car note, utilities, insurance, or other bills. If these things go unpaid you may risk loss of these assets or even foreclosure.
As the executor you may have to step in and take care of some of these estate expenses until the assets are handled through probate or until the property is sold or otherwise disposed of.
So, if you pay expenses out of your own pocket, do you get reimbursed by the estate?
The answer for the majority of expenses is yes.
In Arkansas, the probate code allows for the payment of claims from the estate prior to the distribution of the remaining assets to heirs or other beneficiaries or family members.
Is Any Estate Tax Included in What Gets Reimbursed?
These claims may be for out-of-pocket expenses, creditor claims, or even estate taxes. In the event there is not enough liquid cash in the estate, some property may have to be sold to get sufficient funds.
The good news, however, is that costs and expenses of administration (AKA your out-of-pocket costs) are first in line.
What Part of the Probate Process are Costs and Expenses Paid?
Arkansas Code Annotated Section 28-50-106 outlines that claims are paid in the following order:
(1) costs and expenses of administration.
(2) reasonable funeral expenses, reasonable medical and other expenses incident to the last illness, and wages of employees of the decedent.
(3) claims based on a liability of the decedent for any state tax debt assessed against the decedent, or due at the time of his or her death, or due from the decedent’s estate as a result of his or her death.
(4) all other claims.
What About Estate Expenses?
In simpler terms, any relevant and reasonable costs associated with the administration of the probate estate are the first claims to be paid.
These are costs that directly relate to the payment of bills or other costs that are necessary to deal with the estate property and that are beneficial to the estate and its beneficiaries.
These costs can include things like paying the mortgage, insurance, car note, or other bills as mentioned above.
These costs may also be things like the cost of a dumpster rental to help clean out the house, the cost of necessary repairs to get a home in the proper condition to sell, travel and mileage costs, or even an hourly rate for labor and time you spend working on the estate.
If it benefits the estate, likely it is a valid expense.
How Do I Receive the Reimbursement?
As an executor, to get reimbursed for these costs, you will have to petition the court for payment form the estate.
That petition will outline all of your costs and should also include receipts or bank statements to prove the costs.
It is very important to keep track of all expenses you pay, because without proof, you may not get reimbursed.
This is especially true if there are a large number of claims or if someone is contesting a part of the estate. Keeping an ongoing spreadsheet and sending updates to your attorney is essential for getting your money back.
How Can a Probate Attorney Help?
We know that being the executor of an estate comes with responsibility and likely some costs, but having a good attorney that can help you navigate the legal process or get approval from the court can save you hundreds or thousands of dollars.
We would love to help advise you on what steps you need to take and guide you through this tough time.
