People don't always have an opportunity to settle their affairs before they die, and it isn't unusual that individuals die owing money. This doesn't mean that the creditors are out of luck. The assets of the deceased usually pass into probate where debts are reviewed and settled by the estate executor or personal representative. The procedure a creditor uses to file a claim against a decedent's estate is usually simple, although it varies among states.
What Is a Probate Estate?
When a person dies, everything he owns is part of his estate. Even if he leaves a will setting out who will inherit, the assets do not automatically get transferred to the beneficiaries. Instead, the law requires a court-supervised process termed probate. The estate is steered through the probate process by an executor or personal representative, either named in the will or appointed by the probate court.
The job of the executor is to collect estate assets and pay estate debts, including taxes. Then the executor or personal representative transfers ownership of the remaining property and assets to the beneficiaries named in the will. If the deceased did not leave a will, property passes to close family members under the state intestate laws.
What Is a Claim in Probate?
A claim in probate is an official demand for payment of a debt incurred by the deceased. The creditors of a deceased must file claims in probate in order for the debts to be considered for payment by the executor. A creditor submitting a claim must provide documentation of the debt to have it taken seriously.
Fraudulent or unsubstantiated claims are rejected. If the executor finds a claim to be legitimate and there is sufficient money in the estate, the executor pays the claim.
States often have rules about which creditors take priority for payment if the estate does not have enough assets to pay them all. All debts must be considered before money is distributed to beneficiaries. A creditor whose claim is rejected by the executor can appeal that decision to the court.
How to Make a Claim in Probate
The first step toward recovering a debt from someone who has died is to locate the probate court where her estate is being probated. This is likely to be the court of the county where the deceased resided, where she died or where she owned real estate. This information may be available online if the creditor knows the debtor's name and date of death. Otherwise, it may be necessary to call the various probate courts in the area to find the correct one. Obtain the probate case number.
The second step is to complete a creditor's claim form. Again, these may be available online in some states, but the creditor may have to visit the probate court to pick up a form. The content requested in a probate claim form also varies by jurisdiction, but in every case, it will require information about the debtor, the creditor and the debt.
Debtor information will include the deceased's name, address and date of death, as well as the probate court case number. The creditor will have to identify herself as well and give a home address, and also fill in the debt total and a description of what the debt was for. Generally, the creditor attaches evidence of the debt to the claim. This might be, for example, a copy of a contract or a bill of sale.
What if There Was a Lawsuit Filed Before Death?
If the creditor had brought suit against the debtor and the case was pending at the time of death, the estate executor files a notice in the case and substitutes in as the defendant. The creditor (who is the plaintiff in the case) should also file a claim with the probate court.
Read More: Can You Close an Estate if a Lawsuit Has Been Filed?
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