Virginia Probate — A Guide to Estate Expenses
By Attorney Jennifer Kahl. September 9, 2021
One of the most frequent mistakes made by executors is that they use estate money for inappropriate expenses. This guide is designed to help you (the personal representative of the estate who has been duly qualified by the court) determine what expenses can be paid from the Estate bank account. If an individual (including yourself) pays for valid expenses, you may reimburse that individual if you have receipts, statements, or other documentation that shows proof of payment. If you are not sure if something is a valid expense, ASK the attorney before paying it. Always keep receipts and documentation for every transaction.
- Court fees are valid estate expenses. These may include:
- Purchasing original death certificates
- Estate Qualification fees
- Circuit Court recording fees for filing the Affidavit of Notice
- Printing fees for additional Certificates of Qualification
- Fees associated with other petitions or litigation necessary to administer the estate
- Filing fees paid to the Commissioner of Accounts.
- Attorneys: The money you pay your attorney for assisting you with the administration of the estate is a valid estate expense. However, be aware that fees you pay an attorney may reduce the executor fee to which you may be entitled. In some cases, if the fees you pay your attorney exceed the executor fee to which you are entitled, you may be personally responsible for the excess. (Visit this page for a full explanation of the strange rules governing the calculation of executor and attorney fees.)
- Tax professionals: Fees charged by tax professionals to advise and assist in any estate tax matter are valid estate expenses.
- Financial professionals: Fees charged by financial professionals to advise or assist with the management of estate assets are valid estate expenses.
Fees related to the management of tangible personal property
- Hiring help to sort, organize, and assist with cleaning out the belongings in the house.
- Hiring a company to do an estate sale or auction.
- Paying for temporary storage of items before sale or distribution to the beneficiaries.
- Shipping fees to deliver the items to the beneficiaries.
Other incidental administration fees, such as:
- Postage fees for mailing things to the court, beneficiaries, or Commissioner
- Bank fees associated with estate bank accounts
- Payments for an estate surety bond
- Funeral/memorial bills should be paid by the Estate. If an individual has already paid part or all of these expenses, that individual can be reimbursed from the Estate.
- Bills incurred by the decedent before his/her death. Some common bills may be:
- Medical bills (doctor, hospital, medical transport, medications)
- Home expenses, such as the decedent’s final utility bills
- Outstanding credit card bills, overdrawn accounts, bank fees, etc.
- IRS debts left by the decedent
- Taxes imposed on the Estate itself
***TIMES WHEN THE ESTATE SHOULD NOT PAY***
Exercise extreme caution in the following situations:
- The estate should NOT pay bills that were incurred AFTER the decedent’s death. For example, a person’s credit card should NOT be be used after that person has died. Doing so is credit card fraud. If the card has been used, the person who used the card must pay that part of the bill. The Estate can only pay the portion of the credit card bill that was incurred prior to death.
- Typically, the Estate should NOT pay home bills/expenses incurred AFTER the decedent’s death. Those bills are now the responsibility of the heirs. The estate can only pay house bills/taxes/expenses that were incurred PRIOR to death. (Occasionally, real estate is part of the probate estate, but that is the exception to the rule).
- If the estate is insolvent (meaning that the estate has more debts than assets), you should NOT pay ANY bills unless specifically directed by the attorney. There is a specific order in which bills must be paid, and you can incur substantial personal liability if you don’t follow the order correctly.
- The estate should NOT pay secured debt, unless the Last Will and Testament specifically directs it to do so. Common types of secured debt include mortgages and car payments.
- The estate should NOT pay any expense that is incurred due to your neglect or mismanagement of the estate. You are responsible for those bills. Some examples include:
- Fines imposed by the Commissioner for filing your documents late.
- Extra fees charge by your attorney for hiring her at the last minute, or not getting her documents in time.
- Bank fees that are the result of avoidable overdrafts or other mismanagement.
When in doubt, ask the attorney!!!