What happens to debts in an intestate estate?

In Alabama, if a person dies without a will (intestate), the debts of the estate are paid before the remainder is distributed to the heirs. To do this, the administrator of the estate collects any income from the deceased’s assets, such as real estate, stocks, bonds, autos, etc. They may also liquidate estate assets, if necessary. The next step is for the administrator to pay off the decedent’s debts, such as credit card bills, mortgages, loans, and medical bills. Taxes, probate costs, and funeral expenses must also be paid. The Alabama Probate Code sets out the priority of which creditors are paid first, starting with the funeral home, then taxes, probate costs, secured creditors, medical bills, and unsecured creditors. If there is not enough money in the estate to cover all the debts, then the creditors will only receive a portion, or nothing at all. After the debts are paid, the remainder of the estate is distributed to the rightful heirs in accordance with Alabama intestate succession laws. If there is no surviving spouse, the estate is distributed to the decedent’s children, grandchildren, parents, siblings, and further blood relatives, in that order. If there is no surviving relative, the remainder of the estate is paid to the state of Alabama.

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What happens to debts in an intestate estate?

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