How Do I Pay the Debts of an Estate in Massachusetts?

Full question:

as executor of will which states various accounts outside of Will (beneficiaries)that will be used to pay debt (large final medical debt). Does this mean that these funds should be moved into the Estate Acct instead of being paid directly to beneficiaries? decedent lived in chandler, Texas

• Category: Wills and Estates
• Subcategory: Probate
• Date: 04/07/2025
• State: Maryland

Answer:

Generally, claims of creditors must be paid before distributions may be made to beneficiaries.

Please see the following MD statutes to determine applicability:

§ 8-105 EST. & TRUSTS Order of paying claims against estate
of decedent.

(a) Insufficient assets. — If the applicable assets
of the estate are insufficient to pay all claims in full, the
personal representative shall make payment in the following
order:

(1) Fees due to the register;

(2) Costs and expenses of administration;

(3) Funeral expenses as provided in § 8-106 of this
subtitle;

(4) Compensation of personal representatives as provided in
§ 7-601 of this article, for legal services as provided
in § 7-602 of this article, and commissions of licensed
real estate brokers;

(5) Family allowance as provided in § 3-201 of this
article;

(6) Taxes due by the decedent;

(7) Reasonable medical, hospital, and nursing expenses of
the last illness of the decedent;

(8) Rent payable by the decedent for not more than
three months in arrears;

(9) Wages, salaries, or commission for services performed
for the decedent within three months prior to death of the
decedent;

(10) Assistance paid under the Public Assistance to Adults
Program, as provided in § 5-407(d) of the Human Services
Article; and

(11) All other claims.

(b) Prohibition against preference. — A preference
shall not be given in the payment of a claim over another
claim of the same class. A claim due and payable is not
entitled to a preference over claims not yet due.

§ 8-108 EST. & TRUSTS Payment of claim by personal
representative; time of paying claims.

(a) Six months after decedent's death. — Upon the expiration of 6
months from the date of the decedent's death, the personal representative
shall pay the claims allowed against the estate in the order of priority
prescribed in § 8-105 of this subtitle. The court
may extend the time for payment for good cause shown. A person with a
valid unbarred claim or with a valid unbarred judgment who has not been
paid may petition the court for an order directing the personal
representative to pay the claim to the extent that funds of the estate
are available for payment.

(b) Payment at any time. — The personal representative may pay,
at any time, a just claim which has not been barred, with or without
formal presentation, but he is personally liable to another claimant
whose claim is allowed and who is injured by the payment if:

(1) The payment was made before the expiration of the time limit stated
in subsection (a) of this section and the personal representative failed
to require the payee to give adequate security to refund any part of the
payment necessary to pay other claimants; or

(2) The payment was made in a manner to deprive the injured claimant of
his priority as a result of negligence or wilful fault of the personal
representative.

§ 8-115 EST. & TRUSTS Certain money exempt from claims of
creditor.

The proceeds of a life insurance policy, annuity contract, or any money
payable by a fraternal benefit society are exempt from claims in
accordance with the provisions of §§ 8-431 and 16-111 of the
Insurance Article.

§ 7-102 EST. & TRUSTS Right of personal representative to
possess, control estate; exceptions.

A personal representative has a right to and shall take possession or
control of the estate of the decedent, except that property in the
possession of the person presumptively entitled to it as heir or legatee
shall be possessed by the personal representative only when reasonably
necessary for purposes of administration. The request by a personal
representative for delivery of property possessed by the heir or legatee
is conclusive evidence, in an action against the heir or legatee for
possession, that the possession of the property by the personal
representative is reasonably necessary for purposes of administration.
The personal representative may maintain an action to recover possession
of property or to determine its title.

§ 7-401 EST. & TRUSTS General powers of personal representative.

(a) Exercise of powers. — (1) In the performance of
a personal representative's duties pursuant to § 7-101 of
this title, a personal representative may exercise all of the
power or authority conferred upon the personal representative
by statute or in the will, without application to, the
approval of, or ratification by the court.

(2) Except as validly limited by the will or by an order of
court, a personal representative may, in addition to the
power or authority contained in the will and to other
common-law or statutory powers, exercise the powers
enumerated in this section.

(b) Hold assets. — He may retain assets owned by the
decedent pending distribution or liquidation, including those
in which the representative is personally interested or which
are otherwise improper for trust investment.

(c) Hold securities in name of nominee. — He may hold
a security in the name of a nominee or in other form without
disclosure of the interest of the estate. In this case, the
personal representative is liable for a wrongful act of the
nominee in connection with the security held.

(d) Receive assets. — He may receive assets
from fiduciaries or other sources.

(e) Deposit funds. — He may deposit funds for the
account of the estate, including money received from the sale
of assets, in checking accounts, in insured interest-bearing
accounts, or in short-term loan arrangements which may be
reasonable for use by a trustee.

(f) Deposit assets in restricted accounts. — He may
agree to deposit assets of the estate with a financial
institution so that the assets cannot be withdrawn or
transferred without:

(1) The written consent of the surety on the bond; or

(2) An order of court.

(g) Satisfy charitable pledges. — He may satisfy
written charitable pledges of the decedent.

(h) Pay or compromise claims. — He may pay a
valid claim as provided in this article or effect a fair and
reasonable compromise with a creditor or obligee, or extend
or renew an obligation due by the estate.

(i) Pay funeral expenses. — He may pay the funeral
expenses of the decedent in accordance with the procedures
provided in § 8-106 of this article, including the cost
of burial space and a tombstone or marker, and the cost of
perpetual care.

(j) Pay taxes. — He may pay taxes, assessments, and
other expenses incident to the administration of the estate.

(k) Insure property. — He may insure the property
of the estate against damage, loss, and liability, and
himself, as personal representative, against liability in
respect to third persons.

(l) Vote stocks. — He may vote stocks or other
securities in person or by general or limited proxy.

(m) Sell or exercise stock rights. — He may sell or
exercise stock subscription, conversion or option rights,
consent to or oppose, directly or through a committee or
agent, the reorganization, consolidation, merger,
dissolution, or liquidation of a corporation or other
business enterprise.

(n) Sell, purchase, or otherwise deal with property. —
He may invest in, sell, mortgage, pledge, exchange, or lease
property.

(o) Borrow. — He may borrow money.

(p) Deal with debtor of estate. — He may release
or terminate a mortgage or security interest, if the
obligation secured by the mortgage or security interest was
fully satisfied during the lifetime of the decedent or during
the administration of the estate. He may also extend or renew
any obligation owed to the estate.

(q) Pay encumbrances. — If assets of the estate are
encumbered by a mortgage, pledge, lien, or other security
interest and if it appears to be in the best interests of the
estate, he may pay the encumbrance, or convey or transfer the
assets to the creditor in satisfaction of his security
interest, in whole or in part, whether or not the holder of
the encumbrance has filed a claim.

(r) Convey reversions. — Regardless of a contrary
provision in the will, he may execute, upon the written
demand of the owner of a redeemable leasehold or subleasehold
estate, a full and valid conveyance of the reversion or
subreversion held by the estate.

(s) Continue business. — He may continue an
unincorporated business or venture in which the decedent was
engaged at the time of his death:

(1) In the same business form for a period of not more than
four months from the date of appointment of a personal
representative, where continuation is a reasonable means of
preserving the value of the business including goodwill;

(2) In the same business form for an additional period of
time that may be approved by order of court, in a proceeding
to which all persons interested in the estate are parties; or

(3) Throughout the period of administration, if the
business is incorporated after the death of the decedent.

(t) Incorporate a business. — He may incorporate a
business or venture in which the decedent was engaged at the
time of his death if none of the probable distributees of the
business who are competent adults objects to its
incorporation and retention in the estate.

(u) Convert sole proprietorship. — He may convert
a sole proprietorship the decedent was engaged in at the time
of his death to a limited liability company.

(v) Perform contracts. — He may perform the
contracts of the decedent that continue as obligations of the
estate, and execute and deliver deeds or other documents
under circumstances as the contract may provide.

(w) Exercise options in life insurance policy. — He
may exercise options, rights, and privileges contained in a
life insurance policy, annuity, or endowment contract
constituting property of the estate, including the right to
obtain the cash surrender value, convert the policy to
another type of policy, revoke a mode of settlement, and pay
a part or all of the premiums on the policy or contract.

(x) Employ specialists. — He may employ, for
reasonable compensation auditors, investment advisors, or
persons with special skills, to advise or assist him in the
performance of his administration duties.

(y) Prosecute or defend litigation. — He may
prosecute, defend, or submit to arbitration actions, claims,
or proceedings in any appropriate jurisdiction for the
protection or benefit of the estate, including the
commencement of a personal action which the decedent might
have commenced or prosecuted, except that:

(1) A personal representative may not institute an action
against a defendant for slander against the decedent during
the lifetime of the decedent.

(2) In an action instituted by the personal representative
against a tortfeasor for a wrong which resulted in the death
of the decedent, the personal representative may recover the
funeral expenses of the decedent up to the amount allowed
under § 8-106(b) of this article in addition to other
damages recoverable in the action.

(z) Use title "executor" or "administrator". — If
the decedent died testate, he may designate himself on
documents as an executor, or if the decedent died intestate,
as an administrator.

(aa) Make distributions. — He may make partial and
final distributions, in cash, in kind, or both, from time to
time during the administration.

(bb) Notice of disposition of medical records of patients
of physician, etc., decedent. — If the estate is
of a physician, podiatrist, optometrist, or dentist who was a
sole practitioner, the administrator shall follow the notice
requirements under § 4-305 of the Health — General
Article before the destruction or transfer of any medical
records of a patient of the decedent.

(cc)(1) Compliance with environmental laws. — To
comply with an environmental law, a personal representative
may:

(i) Inspect property held by the personal representative,
including any type of interest in a sole proprietorship,
partnership, limited liability company, or corporation, and
any assets owned by a sole proprietorship, partnership,
limited liability company, or corporation to determine
compliance with an environmental law and respond to an actual
or potential environmental liability relating to the
property;

(ii) Before or after the initiation of a claim or a
governmental enforcement action, take any action necessary to
prevent, abate, or otherwise remedy an actual or potential
environmental liability relating to property held by the
personal representative;

(iii) Settle or compromise at any time a claim against the
estate based on an alleged environmental liability that may
be asserted by any person; and

(iv) Pay from the estate the costs of an inspection,
review, study, abatement, response, cleanup, or other
remedial action that involves an environmental liability as
provided under § 15-524 of this article.

(2) If a personal representative acts prudently and in good
faith, the personal representative is not liable to a person
with an interest in assets held by the personal
representative for a decrease in the value of the assets for
taking action under this subsection or otherwise taking
action to comply with an environmental law or reporting
requirement.

(3) Acceptance by the personal representative of property
or failure by the personal representative to take action
under this subsection does not imply that there is or may be
liability under an environmental law with respect to any
property.

(dd) Donation of conservation easement. — A
personal representative may donate a conservation easement on
any real property in order to obtain the benefit of the
estate tax exclusion allowed under § 2031(c) of the
United States Internal Revenue Code of 1986, as amended, if:

(1) The will authorizes or directs the personal
representative to donate a conservation easement on the real
property; or

(2) Each interested person who has an interest in the real
property that would be affected by the conservation easement
consents in writing to the donation.