How to Pay Living Expenses While Money's Tied Up in Probate
Your unanticipated death could create an immediate financial crisis for your family. Family allowance statutes enable the probate court to provide money for the support of your spouse and minor children during the probate process. In fact, family allowance statutes are among the few distributions that can be made from your estate without risk before the claims of your creditors are paid.
Your spouse and children may rely on you as the family’s breadwinner. And even if you aren’t the sole breadwinner, the income you provide to your family may provide a substantial portion of basic care, such as food and shelter, for your family. But you have several assets and your will specifies what goes to your family, so you don’t have this problem, right?
Not necessarily! Your estate may be tied up in the probate process for an extended period of time. Typically, your estate can’t make any distributions to your beneficiaries until all debts to your creditors have been paid. Therefore, your family’s immediate financial needs, such as the mortgage payment and even paying for utilities and food, may be in jeopardy!
The amount of your family’s allowance under your state’s law may depend on a number of factors, including your estate’s size and your family’s living expenses. Ask your attorney to inform you what the allowance is likely to be so you can factor that into your overall estate plan. For example, you may want to set up your gift-giving strategy to transfer enough cash while you’re alive to your beneficiaries that they can use to help cover living expenses during the probate process.