Death does not put an end to debts. Under probate law, a creditor may file a claim for repayment against the estate of the deceased. A personal representative or administrator is responsible for keeping an account of these claims. State law outlines the requirements for filing such claims by mail to the representative or administrator and with the probate court. The law also sets deadlines for claims.
When an individual dies, an estate is created that holds the person's money, investments and property. A personal representative, nominated in the decedent's will, handles the estate, including payment of the deceased's debts. If there is no will, the deceased is said to have died "intestate" and the probate court will appoint an administrator.
Presentation of Claims
State laws govern the payment of estate debts. These liabilities may include past due taxes, personal loans, business loans, contract liabilities and credit card accounts. A creditor having a claim against an estate may present it in one of several ways, depending on state law. In Ohio, for example, creditors can make a claim in writing to the executor or administrator, or by a letter to the deceased that is then forwarded to the executor. The creditor may also file a copy of the claim with the probate court. The deadline in Ohio for filing claims against an estate is six months from the date of death. In Arizona, the deadline is four months from the first issuance of a Notice to Creditors, which can be published in a newspaper and mailed to those creditors the personal representative knows about.
Acceptance or Rejection
The law does not allow an estate to close until all claims are either accepted or rejected. The personal representative must make this decision, usually in writing and served on the creditor by certified mail. In Ohio, a personal representative must decide whether to reject or pay claims within 30 days of receiving them, with the exception of tax assessments. The creditor still has the right to pursue the claim if the personal representative misses this deadline. If the claim is rejected, the creditor can appeal the decision in probate court.
Prior Legal Actions
Probate laws also deal with unresolved legal actions. If a creditor or plaintiff has already filed a lawsuit against the deceased before his death, and if the case is not resolved at the time of death, the executor or administrator must file a notice in the prior case and present himself as the substituted defendant. The creditor or plaintiff must also file notice of the claim with the probate court. Not all claims survive the death of a defendant, however. For example, in California, a plaintiff may not pursue punitive damages against someone who is deceased. The death of a defendant would preclude the future misconduct that punitive damages are designed to prevent.