Before personal representatives distribute an estate’s assets to the decedent’s heirs and beneficiaries, they should first pay the deceased debts and obligations as part of the probate process.
However, this does not mean that every creditor who makes a claim against the estate will receive payment. Certain probate rules apply before they can successfully collect debt owed.
Creditors who are discoverable
An estate’s personal representative will notify all reasonably ascertainable creditors. As long as a creditor has a valid claim against the deceased debtor and the administrator locates them during the discovery process, then the probate law entitles them to collect debt according to the state’s order of payment.
However, if the estate’s administrator is not able to locate a certain lender, despite applying the necessary efforts to find and notify all creditors, then the estate might skip paying them unless they see the newspaper publication.
Creditors who timely file a claim
Even if the personal representative notifies all discoverable creditors, it does not mean all of them will automatically receive payment. Notified creditors have to file within three months from the first date of publication or 30 days after receiving a copy of the notice, whichever comes later. On the other hand, unknown creditors have to file a claim within 30 days from the first date of publication.
The probate law bars creditors who fail to file within the set period from collecting from the debtor’s estate.
A heavy responsibility for personal representatives
The duties of estate executors and administrators hold a hefty weight and can therefore be overwhelming. Not only do they have to deal with the regular probate process, but they also have to face issues, such as creditor appeals. Nevertheless, having a sufficient understanding of the probate process will help personal representatives perform their responsibilities.