– Walker Law –
Creditor Claims Against Your Estate
Understanding Creditor Claims
Creditor claims against the estate are claims that existed against the decedent prior to his or her death which were not paid during the decedent’s lifetime. (View Resource)
Once a personal representative has been appointed by the court and issued letters of administration, they must give notice to all known and unknown creditors. The process of providing notice is dictated by statute:
Publishing Notice
Unless notice has already been given, upon appointment of a general personal representative, notice thereof, in the form prescribed by court rule, shall be given under the direction of the court administrator by publication once a week for two successive weeks in a legal newspaper in the county wherein the proceedings are pending giving the name and address of the general personal representative and notifying creditors of the estate to present their claims within four months after the date of the court administrator’s notice which is subsequently published. (View Resource) If a creditor fails to present their claim within the time prescribed by law their claims will be barred against the estate.
Claims against a decedent's estate may be presented as follows:
(1) The claimant may deliver or mail to the personal representative a written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed, or may file a written statement of the claim, in the form prescribed by rule, with the court administrator.
(2) The claimant may commence a proceeding against the personal representative in any court where the personal representative may be subjected to jurisdiction, to obtain payment of the claim against the estate, but the commencement of the proceeding must occur within the time limited for presenting the claim. No presentation of claim is required in regard to matters claimed in proceedings against the decedent which were pending at the time of death. (View Resource)
If the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order:
(1) Costs and expenses of administration;
(2) Reasonable funeral expenses;
(3) Debts and taxes with preference under federal law;
(4) Reasonable and necessary medical, hospital, or nursing home expenses of the last illness of the decedent, including compensation of persons attending the decedent, a claim filed under section 256B.15 for recovery of expenditures for alternative care for nonmedical assistance recipients under section 256B.0913, and including a claim filed pursuant to section 256B.15;
(5) Reasonable and necessary medical, hospital, and nursing home expenses for the care of the decedent during the year immediately preceding death;
(6) Debts with preference under other laws of this state, and state taxes;
(7) All other claims. (View Resource)
Conclusion
If any assets of the estate are encumbered by mortgage, pledge, lien, or other security interest, the personal representative may pay the encumbrance or any part thereof, renew or extend any obligation secured by the encumbrance or convey or transfer the assets to the creditor in satisfaction of the lien, in whole or in part, whether or not the holder of the encumbrance has filed a claim, if it appears to be for the best interest of the estate. Payment of an encumbrance does not increase the share of the distributee entitled to the encumbered assets unless the distributee is entitled to exoneration. (View Resource)
Free Consultation
Give us a call for a free 15-minute phone consultation and see the difference an experienced attorney fighting on your side can make.
