An estate account can be used to pay any bill that is a legitimate cost of winding down the deceased person’s financial affairs. That covers funeral and burial costs, the deceased person’s valid debts, federal and state taxes, upkeep on estate property, professional fees, court costs, and the personal representative’s own compensation. What bills can be paid from an estate account comes down to a single test: every dollar leaving the account has to serve the estate, not the representative, because a probate judge will review a final accounting of every transaction before the case closes.
Funeral and Burial Costs
Funeral expenses are among the first bills paid from the estate account, and probate courts treat them as high-priority obligations. The account covers the funeral home’s professional services fee, a casket or urn, a burial plot or cremation, and transportation of the remains. If a family member paid any of these out of pocket before the account existed, the estate reimburses them.
Memorial service costs belong here too: venue fees, flowers, printed programs, and obituary placement. The limit is reasonableness relative to the size of the estate. A $40,000 funeral paid from a $60,000 estate would draw scrutiny; standard arrangements proportionate to the estate’s value are approved without issue.
Taxes the Estate Owes
Tax bills are one of the most consequential categories because the IRS can hold the personal representative personally liable for unpaid balances when the estate had the money to pay them.
The Deceased Person’s Final Income Tax Return
The representative files a final Form 1040 covering the deceased person’s income from January 1 through the date of death, reporting wages, investment income, retirement distributions, and anything else received during that partial year.1Internal Revenue Service. File the Final Income Tax Returns of a Deceased Person Any balance due is paid from the estate account, and any refund flows back into it.
Income Tax on the Estate Itself
An estate that earns $600 or more in gross income during a tax year must file its own return on Form 1041.2Office of the Law Revision Counsel. 26 USC 6012 – Persons Required to Make Returns of Income That threshold is low, and estates clear it quickly if they hold interest-bearing accounts, rental property, or dividend-paying investments. Whatever income tax Form 1041 calculates is paid from the estate account.
Federal Estate Tax
Estates valued above the federal basic exclusion amount file Form 706. For deaths in 2026, that exclusion is $15 million per person, following the increase enacted by the One, Big, Beautiful Bill Act signed into law on July 4, 2025.3Internal Revenue Service. What’s New – Estate and Gift Tax The return is due nine months after the date of death, though the representative can request an extension.4eCFR. 26 CFR 20.6075-1 – Returns; Time for Filing Estate Tax Return Any tax owed is paid from the estate account. Some states also impose their own estate or inheritance taxes at lower thresholds, and those bills come from the account as well.
Valid Debts Owed to Creditors
Before beneficiaries receive anything, the estate settles the deceased person’s legitimate debts. Credit card balances, personal loans, medical bills from a final illness, and unpaid invoices are all proper charges against the estate account, as long as the creditor files a valid claim within the deadline set by state law.
The representative starts this process by publishing a notice to creditors, usually in a local newspaper, which opens the filing window. That window varies significantly by state, running from as little as two months to as long as nine months. A creditor who misses the deadline generally loses the right to collect. The representative reviews each timely claim, verifies the amount, and either pays it or disputes it. If a dispute goes to a court hearing, the legal costs of that hearing are themselves a proper estate expense.
Secured debts work differently. A mortgage lender or auto lender has a lien on the specific asset backing the loan. If the estate plans to keep or sell that asset, the representative can use the account to keep loan payments current and prevent foreclosure or repossession. When the asset is worth less than the loan balance, surrendering it to the lender is sometimes the better financial decision.
Keeping Estate Property Intact
Real estate and other physical assets often need ongoing care while probate plays out, and those costs are proper estate expenses. Mortgage payments and property taxes must stay current to prevent foreclosure or tax liens. Homeowner’s insurance premiums need to remain active.
Utility bills for electricity, water, and heat keep a home from deteriorating during what can be a months-long or years-long process. Lawn care, snow removal, and basic repairs that prevent further damage, like fixing a leaking roof, are all legitimate charges. Storage fees for personal property moved to safekeeping are covered too.
The guiding principle is preservation. The representative should spend what’s necessary to protect asset value, not what would be nice for improving it. A new kitchen renovation is not a proper estate expense; fixing a broken furnace in January is.
Administration Costs
The machinery of probate itself costs money, and those costs come out of the estate account first. Court filing fees to open the case vary widely by jurisdiction, typically running anywhere from around $50 to $1,200 depending on the estate’s value and local fee schedules. Certified copies of court documents, newspaper publication of legal notices, and postage for required mailings add smaller recurring charges throughout the case.
If the court requires a surety bond to protect beneficiaries from mismanagement, the annual premium is a proper estate expense. Bond premiums are generally a percentage of the bond amount, often between 0.5% and 3% depending on the representative’s creditworthiness. Not every estate needs a bond; courts often waive the requirement when the will excuses it or when all beneficiaries consent.
Professional fees are usually the largest administration cost. Attorney fees, accountant fees for preparing tax returns, and appraiser fees for valuing real estate or business interests all come from the estate account. The personal representative is also entitled to compensation for their own work. Most states leave the amount to the probate court’s discretion under a “reasonable compensation” standard, while a smaller number set statutory fee schedules based on the estate’s total value, with percentages typically ranging from about 1% to 5% and decreasing as the estate grows larger.
Payment Order When the Estate Runs Short
This is where things get dangerous for the personal representative. When an estate doesn’t have enough money to cover all its obligations, bills cannot be paid in whatever order they arrive. State probate codes set a strict priority hierarchy, and paying debts out of order can make the representative personally liable to higher-priority creditors for the shortfall.
The exact order varies by state, but most follow a structure modeled on the Uniform Probate Code:
- Administration expenses, including court costs, attorney fees, and the representative’s compensation
- Reasonable funeral and burial costs
- Federal tax debts, which under federal law jump ahead of almost everything else when an estate is insolvent5Office of the Law Revision Counsel. 31 USC 3713 – Priority of Government Claims
- Medical expenses of the final illness, including hospital bills and physician charges
- State and local tax debts
- General unsecured debts, which share whatever remains on a pro-rata basis
Family allowance and spousal protections provided by many states can also factor in, sometimes ranking ahead of creditors entirely. The representative needs to check their specific state’s priority rules before writing a check.
The personal liability risk under 31 U.S.C. ยง 3713 is not theoretical. If the estate owes $50,000 in federal taxes and the representative pays $50,000 to credit card companies first, the IRS can collect that $50,000 from the representative personally.5Office of the Law Revision Counsel. 31 USC 3713 – Priority of Government Claims The IRS has discretion to allow reasonable administration and funeral expenses to be paid ahead of its claims, but that discretion belongs to the IRS, not to the representative acting unilaterally.6Internal Revenue Service. 5.5.2 Probate Proceedings
Bills That Cannot Be Paid From the Estate
Not every bill that crosses the representative’s desk belongs on the estate account. Payments the judge later finds improper can be reversed through a surcharge order, meaning the representative repays the estate from personal funds.
The clearest violations involve the representative’s own personal expenses. Using estate funds to pay a personal credit card bill, personal taxes, or living expenses is a breach of fiduciary duty. It does not matter if you plan to pay it back. Courts treat commingling of personal and estate funds as a serious red flag, and it can lead to removal from the role entirely.
The account should also not pay debts that belonged to someone other than the deceased, such as a beneficiary’s personal debts or a family member’s mortgage. Gifts to friends or relatives that the will didn’t authorize are off-limits. Improvements to estate property that go beyond preservation, like remodeling a kitchen rather than fixing a broken pipe, cross from maintenance into enhancement and can be challenged.
The estate also does not pay debts that were properly discharged during the deceased person’s lifetime, such as obligations eliminated in a prior bankruptcy. And if a creditor misses the filing deadline after the notice to creditors was published, paying that stale claim is improper because the estate no longer has a legal obligation to honor it.
Records You’ll Need for the Final Accounting
Every payment from the estate account will eventually appear in a final accounting submitted to the probate court. The judge reviews this document to confirm the representative handled the money properly before authorizing distribution to beneficiaries. Sloppy records invite objections from heirs and can delay closing the estate by months.
Save every receipt, invoice, and proof of payment. For each expense, be ready to answer two questions: what was this payment for, and why was it necessary for the estate? Payments that satisfy both sail through the accounting. Payments that don’t will need to be explained in court, and if the explanation falls short, the court can order the representative to reimburse the estate out of pocket.