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How debt can affect the probate process

On Behalf of | Oct 29, 2024 | Probate

Probate proceedings are a necessary part of estate administration. With exceptions for particularly small estates, most estates have to pass through probate court to ensure compliance with the decedent’s instructions and state statutes.

In many cases, it can take a year or longer to complete the probate process. The size of the estate and conflicts related to the validity of documents or the actions of the personal representative can influence how long it takes to settle probate matters. In some cases, debts owed by the decedent can contribute to lengthy probate proceedings.

What must a personal representative do to address residual debts as part of the probate process?

Communicate with creditors

One of the first responsibilities a personal representative must fulfill is to identify and communicate with known creditors and publish notice about estate administration for unknown creditors. Doing so provides those with an interest in the estate because of the financial obligations of the decedent to make an appropriate claim in probate court. Those outside parties generally have to file claims in the courts in accordance with state law if they hope to assert their rights as creditors.

Pay debts in the proper order

In some cases, the estate contains enough property to cover all financial obligations without any complications. Other times, the financial obligations of the decedent may outweigh their total assets. In those cases, some debts may go unpaid. The representative must take care to ensure that they pay them in the right order of priority. The failure to do so might lead to liability later.

The same is true of scenarios in which the personal representative distributes assets to beneficiaries and then lacks the necessary capital to repay all of the decedent’s financial obligations. Debts can ultimately extend how long it takes to complete the probate process and may also reduce how much the beneficiaries eventually inherit from the estate.

Understanding the technical requirements that arise during estate administration can help those serving as personal representatives avoid major mistakes. Representatives can sometimes end up saddled with personal liability if they do not follow the right procedures and mismanage estate resources. Thankfully, having support throughout the probate process can make it easier for representatives to fulfill their duties, including properly settling debts.