What can be paid out of an estate account?

What funeral expenses can be paid by an estate?

• If you paid for the funeral, you will be paid back by the estate, as long as the costs were reasonable.

• The estate will not pay for things like family members' transportation to the funeral. Headstones are also not covered.

• Reasonable costs of administering the estate are also paid from its assets.

• It's advisable to consult an attorney about reimbursement of funeral expenses from the estate.

If you are handling the estate of a loved one who has passed away, it’s important to know which expenses the funds of the estate can pay for and which they can’t. There may, for example, be expenses that you or another family member had to pay out of pocket for, such as the funeral costs, or utility bills to keep the house in good shape. While you can expect the estate to repay these immediate expenses when settling all of its debts, you should keep in mind which expenses the estate will be responsible for and which it will not.

Keeping track of what the estate is able to cover and what it isn’t can seem confusing, especially if your loved one’s estate is complex and requires the services of various professionals to correctly manage it. There are a lot of decisions to be made, and the executor has quite a bit of discretion over what are reasonable expenses for the estate to cover.

Once probate has begun, the executor can pay all of these reasonable expenses from the estate’s assets, as well as repaying costs the family may have covered up front. However, if the estate’s debts outweigh its assets, the law and the courts will determine the priority of which debts are paid first and which may not get paid at all. In this situation, it is crucial to understand what expenses are considered the responsibility of the estate and what the priority is for repaying them.

How do you pay for a funeral before probate?

When someone dies, one of the first expenses the family incurs is the cost of the funeral. Although this is a bill that the estate will cover, there will be costs that your loved one’s family will need to pay for up front, with the expectation of being paid back by the estate in probate.

Funeral homes are extremely familiar with this situation, and many of them will be willing to wait until probate to be paid, as long as you sign a promise to pay yourself if the estate turns out to be unable to. But even in these cases, there are still expenses that the family will need to pay for immediately, such as cemetery fees and burial costs, flower arrangements, any venue reservation or catering needs, and so on. 

If you’re unsure as to how large the estate is, what debts might still be owed, and therefore what sort of budget you have to work with, consider playing it safe and being modest in your funeral choices. If the beneficiaries receive a much smaller inheritance due to funeral costs and feel that you were in the wrong spending so much on the funeral, then they can take you to court. 

If the judge agrees with the beneficiaries that the funeral costs were unreasonable, you may become personally responsible for those expenses and you will only be reimbursed for the estate up to the amount that the judge decides is fair. To avoid situations like this, it is advisable to plan the funeral with the input of other beneficiaries and family members.

When planning a funeral, you want to know what the estate will cover and what it will not. The following are generally reimbursed out of the estate:

• Funeral home services—including all preparation, hosting the service

• Burial and/or cremation costs

• Casket for a burial or urn for cremation

• A burial plot

• Burial clothing

• Flower arrangements

• Publication of an obituary

• A lunch or dinner gathering after the service for friends and family

The following will typically not be reimbursed:

• Any type of airfare or transportation for family or friends to attend the ceremony

• Hotels or meals for those in town for the funeral

• Clothing for those attending

• A headstone or any other permanent memorial

Can I reimburse myself from an estate account?

An executor can be reimbursed for expenses related to the effective handling of the estate and settling all of your loved ones affairs. As with funeral expenses, there is an expectation that these costs will stay within the bounds of what is reasonable.

These costs are typically covered by the estate:

• Court fees. The fees for filing the will, petitioning for probate, and similar fees are covered, plus all similar court costs.

• Accountant and attorney fees: The rates of any professionals you bring in to help with the managing of the estate, financially, legally, or otherwise, will be covered by the estate. If the estate is sued for any reason, the defense attorney’s fees and all other expenses of the suit will also be covered by the estate. 

• House-related expenses: If your loved one left behind a house that you and your family have decided you’d like to sell, the estate will cover appraisal, broker fees, repairs and any other fees that come with maintaining and staging the house. If it is necessary to move your loved one’s belongings out of the house in order to sell it, the estate can cover moving costs and storage in the interim, as well as any costs incurred in throwing away belongings or safely disposing of sensitive material. It will not, however, pay moving costs for beneficiaries to retrieve and take ownership of their inherited assets. Whether you are selling the house or not, the estate will also cover maintenance—both internal and external, for example, upkeep of the lawn—utilities, and mortgage payments until the house is sold or transferred to a beneficiary.

• Other selling expenses: Appraisal of any other items can be covered, as well as the fees of an estate sales company, brokerage costs, and other expenses incurred in selling your loved one’s assets.

• Transportation and housing for the executor: Though this can sometimes cause a degree of tension with the beneficiaries, if the executor lives in another state (or country), the estate pays for their transportation and housing fees while they deal with the estate in the state and county where your loved one lived. This is an important area where what is considered a reasonable expense comes into play, as the beneficiaries can step in and file a claim against the executor if they feel that their travel and hotel spending is unreasonable. For this reason, some states require an out-of-state executor to post bond, or to appoint an in-state agent to take care of things when they are away.

• Pet expenses: If your loved one left behind a pet, the animal is considered property and is part of the estate. Any care or boarding costs while a decision is made about who will be taking the pet is covered. 

• Reimbursement: If you or anyone else paid for any covered expenses, be they funeral expenses or attorney’s fees, you’re entitled to be reimbursed by the estate. But that’s it; the estate is not your personal checking account. It’s important to keep all receipts and bills that pertain to any expenses paid with one’s own money, in order to avoid any questions about whether they should be repaid.

Expenses that are not covered by the estate include:

• Transportation and housing of friends and family: While the executor can have these costs covered by the estate, anyone else who wants to take part in any stage of the administration of the estate will have to pay for their own transportation and housing.

•  Costs incurred while the person was alive: If your loved one had wanted to prepare for their passing, they may have enlisted you or other family members to help with some of that preparation, such as cleaning out their garage. Expenses you might have paid for as part of that effort are not reimbursed by the estate.

While in the end what can be covered comes down to what is a reasonable expense, it is still a good idea to consult a lawyer to make sure you’re handling the estate properly. During this emotionally challenging time, it can be difficult to stay on top of all of the regulations, and making use of the services of a professional will give you and the family peace of mind.

You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.