Personal Representatives (PRs) of estates must notify several interested parties when someone dies. Notifying known and unknown creditors of the death is one of the first things a PR should do. Once public notice of the testator's death is published, creditors have four months to make claims for repayment against the estate.
Creditors may include lenders, credit card companies, medical facilities, legal service providers, accountants, investment advisers, or a plaintiff in a tort case against the estate. The PR may even be a creditor. Each party requires notice of death by a certain deadline.
When creditors make on-time claims against the estate, you as the PR have specific duties:
* First, you must review and scrutinize each claim for all information necessary to possibly pay the debt to the correct party and to validate the basis of the claim.
* The probate court may need to rule as to whether is claim received is an allowed claim.
* If there are enough assets in the estate to cover an allowed claim, you should pay the debt.
* If there are not enough assets to cover the claim, you must notify the creditor of the deficiency and notify the Court of the insolvency of the estate.
* At this point, you need an experienced lawyer as counsel, if you do not already have one. Certain creditors must be paid before others and some creditors not at all, depending on each circumstance.
Known creditors are those you will be able to reasonably find evidence of by looking back into the testator's (decedent's) records over the last few years. Your lawyer will send them notices directly, notifying them of the death and that the estate has been opened. Unknown creditors are those that you cannot find through reasonable means in a timely manner. This is the purpose of the public notice.
If you've been named Personal Representative of someone's estate and have questions about creditors' claims, give us a call at 253.858.5434 to see how we can help.