If a person owes money to creditors when that person dies, creditors have a right to attempt to collect debts from an estate that is in probate. The estate must pay creditors before beneficiaries can receive any distributions from the estate.
State and federal laws govern the specific rights creditors have to an estate.
Obligations of the executor
The executor of an estate must fulfill three duties:
- Gather the assets of the estate
- Pay creditors
- Distribute assets to beneficiaries
If the executor fails to pay creditors before distributing assets, the creditors may pursue the beneficiaries for unpaid debts. The executor is also required to notify all creditors and publish a notice of the probate proceeding so that they can make their claims. Executors who do not make a reasonable attempt to notify creditors may be personally liable to the estate for the debt.
Obligations of creditors
Creditors must deliver a claim with a supporting affidavit to the personal representative or file it with the court and provide a copy to the personal representative within 60 days of notice. After 60 days have passed, creditors may no longer pursue debts from an estate.
Executors are not expected to conduct an exhaustive search to find creditors, but it is important to notify known creditors before distributing assets from the estate. Creditors must also follow proper procedures when attempting to collect a debt from the estate. If you believe a creditor is improperly attempting to collect a debt, a probate attorney may be able to help you.