Disclaimer: This article is for educational purposes and does not constitute legal advice.
Detailed Answer
In Texas, an executor (personal representative) owes a fiduciary duty to manage and preserve estate assets. Under Texas Estates Code § 401.002, you must act in the best interests of beneficiaries before distributing funds.
To settle creditor claims correctly, Texas law requires you to confirm available estate funds first. Specifically, Texas Estates Code § 356.001 provides: “A personal representative may pay claims allowed against the estate as soon as estate assets are available.” This means you should:
- Gather a complete inventory of assets, including cash, bank accounts, and other liquid property.
- List all valid creditor claims and administrative expenses.
- Ensure sufficient liquid funds are on hand or arrange timely asset sales to cover approved claims.
If the estate lacks enough liquid assets, the law sets a strict payment order to protect priority claims. Under Texas Estates Code § 356.101, you must first pay funeral and administration costs, then family allowances, and finally general creditors on a pro rata basis.
Failing to verify available funds may result in improper distributions and personal liability for breach of fiduciary duty. Always maintain accurate records of estate balances and transactions to support your decisions.
Helpful Hints
- Open a dedicated estate bank account to keep estate funds separate from personal funds.
- Seek court approval before selling major assets to cover creditor claims.
- Document every payment with receipts, canceled checks, and creditor acknowledgments.
- Communicate claim status and payment timelines clearly in writing to each creditor.
- When in doubt, consult a qualified Texas probate attorney for guidance on complex estate matters.