The loss of a loved one is a difficult and highly emotional time period. Although no one wants to think in terms of legalities right after losing a loved one, the reality is there are a number of legal issues that must be addressed following a death. The most important of these is usually probating the estate of the decedent. Though it may be the last thing you want to deal with, an important aspect of probate involves paying off creditors of the decedent. If you are the Executor, Personal Representative of the estate, or just a concerned family member, you will want to know how the debts of the decedent are handled during probate.
Probate is initiated shortly after the decedent’s death by offering the decedent’s Last Will and Testament to the appropriate court for probate. Once probate is open, creditors of the estate must be notified. Known creditors are notified personally and unknown creditors are legally notified by publishing notice of the probate in a local newspaper. Creditors then have a specific period of time within which they must file a claim with the court. In the State of Illinois creditors have six months.
Disbursements from the estate to beneficiaries cannot be made before debts of the estate are paid. An Executor risks personal liability for the debts if he or she makes disbursements before debts are paid. As claims are filed, the Executor reviews them and approves or denies them. If there are sufficient assets in the estate, all claims are paid out of those assets. When assets are lacking, claims are prioritized as follows:
Funeral expenses and administrative fees (such as the Executor, attorney, appraisers etc.)
Secured debts such as a mortgage
If you are the Executor or Personal Representative of an estate, it is imperative that you consult with an experienced estate planning attorney to ensure that you do not expose yourself to liability for debts of the decedent.
If you have additional questions or concerns about probating an estate and/or how to handle debts of the decedent during probate, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.