How to determine an heirs share if they owe the estate money?

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How to determine an heirs share if they owe the estate money?

I am the executor of my mother’s estate. The assets are real property and an unpaid debt of $40,000 owed by 1 of the beneficiares to the estate. The total value is $202,000. There are 3 beneficiares. The actual value of the estate is $162,000. The debt is going to be deducted from the 1/3 legacy of the beneficiary. What is the correct way to determine the 1/3 legacy?

Asked on March 29, 2011 under Estate Planning, Texas

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I am so sorry for your loss.  Did you determine the "actual value" by deducting the $40,000 from the "total value"?  Is this total value the asses of the estate minus the liabilities of the estate - the estate has to pay off the debt owed by your Mother and possibly pay estate taxes as well.  Now, if this is the final number after the debt paid, etc., it is my understanding that you would divide the total assets amongst the three beneficiaries leaving about $67,000 for each of you and then you can deduct the $40,000 owed by the one beneficiary from his or her share for a distribution of about $27,000.  If you add up the $67K plus $67K plus $27K you get $161K which is roughly the number you listed as the actual value. ASk for an accountant to help here.  You need to issue a satisfaction of the debt as well.  Good luck.


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