Payments of Debt after Death

The executor of a will is in charge of the deceased person’s estate. He or she has been appointed to carry out certain duties. One of those duties is paying off any remaining debts that the deceases may still have. This can be an arduous process for several reasons. It is hard enough to cope emotionally with a loved one’s passing. Having to deal with his or her financial situation can elicit even more feelings of despair.

Notifying creditors may seem like a quick and easy process, but that is not always the case.

• What if a creditor presents a claim that you did not realize existed?
• What if the creditor presents a claim after their designated time period has ended?
• What happens if your deceased loved one does not have enough cash in his or her estate to cover the debts owed?

All of these questions can be very challenging to face. Below are the situations that an executor will run into as the designated person in control of a deceased individual’s estate. 

Notification

When a will is submitted into probate, a notice to the deceased individual’s creditors must also be placed in the local newspapers. Even if the executor does not know who those creditors are, he or she is still legally responsible for notifying them.  The executor could also contact the lawyer of the deceased, asking for information about the deceased’s creditors.

Creditors and Claims

The creditors are given four months from the posting to present their claims. If they fail to do so, they are barred from collection forever. However, creditors are given one year from the person’s death to present their claims if the notification was published in an obscure newspaper or if the executor could have found out about this debt with a minimal amount of research. Claims must be paid, once they are presented. Many times, the deceased will leave a certain amount of money to pay off these debts. These debts should be paid off using a special checking account, in the estate’s name.

Priority Debts

If there is not enough cash in the estate to pay off all of the expenses due, the executor will have to selling off liquidating assets. These liquidating assets can include a house or car, even if this cuts into what was meant to be left to certain beneficiaries. Some debts, such as attorney fees are given priority over other debts. This means that no other debt can be paid until the priority debts have been settled.