Ways that the Probate Process Deals with Debt
The period immediately following the death of a loved one is frequently emotionally challenging. The last thing a surviving spouse or other heirs need to deal with is persistent or harassing calls from bill collectors due to the probate process. If your loved one has creditors, however, these debts must be settled.
Furthermore, most creditors know that they have a limited time during which they can make a claim against the estate during the probate process. For this reason, they are usually quick to follow up once they receive notice that a debtor has passed away.
Debts and the Probate Process
If you are the personal representative (executor or administrator) of the estate, it’s important to understand that the estate must pay all creditors before it can make any distributions to the estate’s beneficiaries.
Furthermore, the estate has an obligation to notify any creditors that the decedent has died. Creditors then have six months to file a claim against the estate. If they fail to file a claim within this six month time period, any future claims are barred.
Once the personal representative has gathered all the creditor claims, he or she must pay any valid claims. This is where the help of an experienced probate attorney at law is invaluable, as state law is very specific regarding which claims must be paid and in what order.
In most cases, the estate must first settle all funeral costs, taxes, and administrative costs. The next set of debts to be paid include secured debts, such as mortgages. Finally, the estate must pay any unsecured debts, such as credit cards. Certain types of debts are exempt under state law, so check with your probate attorney prior to paying creditors. A mistake can cost the estate money and even result in financial liability for the personal representative. Don’t wait – speak to an experienced probate and estate planning attorney today.
Springfield, Missouri Estate Planning Law Firm
At the Law Offices of Randy L. Smith, LLC, we help people create estate planning documents that provide peace of mind. Call today at (417) 841-2775 to speak to an experienced estate planning lawyer about your case.
This website has been prepared by The Law Office of Randy L. Smith, LLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.