Detailed Answer
When a loved one dies in Maryland, the personal representative (executor or administrator) must manage estate expenses and ongoing bills throughout probate. Under Maryland Code, Estates & Trusts §7-201 and §7-202, the court issues Letters of Administration (Letters) to empower the personal representative to act on the estate’s behalf. Once appointed, the representative takes these steps to keep the estate solvent and in good standing:
1. Secure and Inventory Assets
Immediately locate bank accounts, real property, life insurance proceeds, and other assets. File an inventory within three months of appointment as required by Estates & Trusts §7-103. This document shows the court and creditors the estate’s value.
2. Open an Estate Bank Account
Deposit all estate funds into a dedicated estate account. Keeping estate money separate from personal funds prevents accusations of self-dealing and simplifies accounting.
3. Publish or Mail Creditors’ Notices
Under Estates & Trusts §7-501 et seq., the personal representative must notify known creditors by mail and publish a notice to unknown creditors in a local newspaper. Claimants then have six months from the first publication to file debts against the estate.
4. Identify and Prioritize Expenses
Maryland law (Estates & Trusts §7-301) classifies allowable expenses in this order: funeral costs, administration expenses (appraisers, legal fees), tax obligations, secured debts (like mortgages), and general unsecured debts. Address these categories promptly to avoid penalties.
5. Pay Ongoing Bills
- Utilities and maintenance to protect real property value.
- Mortgage or rent to prevent foreclosure or eviction.
- Insurance premiums (homeowners, auto) to cover liabilities.
- Property taxes to avoid liens—Maryland Code, Tax-Property §14-810.
Use the estate account for all payments. Keep thorough records of dates, payees, and amounts.
6. Maintain Accurate Records and Reporting
Prepare interim accountings for beneficiaries and the Orphans’ Court. Maryland courts often require periodic reports to track receipts and disbursements. Accurate bookkeeping simplifies the final accounting and reduces creditor disputes.
7. Final Accounting and Distribution
After paying valid claims and administrative expenses, file a final accounting with the court. Once approved, distribute remaining assets according to the will or Maryland’s intestacy rules (Estates & Trusts §§ 3-101 et seq.).
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Helpful Hints
- Open the estate account promptly—banks often require Letters of Administration.
- Maintain a spreadsheet of all receipts and payments.
- Communicate proactively with beneficiaries to manage expectations.
- Keep copies of published creditor notices and mailing receipts.
- Seek an extension from the Orphans’ Court before statutory deadlines if necessary.
- Consider hiring a probate accountant for complex estates.