Recovering Money from a Decedent’s Estate
It not uncommon for creditors to be owed money from individuals who pass away. For smaller creditors, it can be frustrating to go through the process of recovering money from the estate of someone who dies with outstanding debts. Nevertheless, recovering money from a decedent’s estate is possible in a number of situations, and people should keep some considerations in mind to make this process easier.
Establishing an Estate
The most important thing to know about recovering money from a decedent’s estate is that a decedent needs to have resources to justify the creation of an estate in the first place. When people are living, they can rely on their earnings in order to make loan payments on debts that they owe. Of course, decedents no longer have this source of income and only the assets that belong to the estate can be used to pay debts that may be owed by a decedent since spouses and family members are not ordinarily liable for a decedent’s debts.
If the decedent does not have assets that can form an estate, it is possible that an estate will not be established for the decedent. Moreover, if a decedent structures their affairs such that assets automatically transfer to other people upon their death without going through the probate process, it might be difficult to recover money from the decedent’s estate. However, an estate ordinarily must be established to transfer real property, cars, and other valuable items. If someone owns this type of property, it is likely that an estate will be established for the decedent, and a creditor can make a claim for an amount owed.
Notice of Claim
The first step toward recovering money from a decedent’s estate is filing a notice of claim. Different jurisdictions have various methods about informing creditors about an estate. Some permit notice to creditors through publication, and some jurisdictions require executors of estates to mail notices that an estate has been established to known creditors. However, some jurisdictions require creditors to keep track of their debtors and find out if a debtor has died and whether an estate has been established.
In any event, once a creditor discovers that an estate has been established for a debtor, creditors often need to file a notice of claim. This document puts the estate on notice that a creditor has a claim to assets of a decedent, and the notice lists the total amount owed. Moreover, the notice of claim often includes some reasoning for why the creditor is entitled to such funds from the debtor. Depending on the jurisdiction, such a document either needs to be filed with the court or served on the executor of the estate and an experienced probate attorney should know how to serve and/or file a notice of claim.
Objections to a Notice of Claim
The next step in the process of recovering money from a decedent’s estate is usually the period in which the estate can object to a claim. An estate can object to a claim for a variety of reasons. Perhaps most importantly, the estate can say that the debt did not exist and that insufficient evidence has been presented demonstrating that a debt is owed to the creditor. An estate can also argue that the notice of claim was not timely provided and should be struck, but this only applies if the timeframe to serve and/or file a notice of claim has expired. Moreover, if there is a cosigner on the debt or other legal issues, the creditor’s ability to sustain a notice of claim can be impacted. Many traditional defenses that often arise in litigation may be implicated when recovering money from a decedent’s estate, and an experienced estates lawyer should be able to argue in favor and against permitting a creditor to recover money from an estate following the service of a notice of claim.
Recovering Money
After a claim has been recognized as valid, the next step of recovering money from a decedent’s estate is to collect the funds. In the best-case scenario, the executor of the estate will pay off the creditor for the amount owed with the estate’s assets. Most creditors are typically entitled to be paid before beneficiaries of the estate, and as a result, it is important for estates to pay off creditors. If the estate does not provide funds to pay off a debt, litigation can be instituted in order to recover such money from the estate. Sometimes, an executor may pay a beneficiary their share of the estate proceeds before a creditor is paid. In such situations, creditors may have a claim against the beneficiaries that have been paid and against the executor for wrongfully distributing estate assets before all creditors have been paid. Different jurisdictions have various rules about recovering money from an estate and beneficiaries, and options may change depending on when money is recovered. It is important to speak with an experienced estates lawyer in the proper jurisdiction to evaluate all of your options.
The Rothman Law Firm is experienced with probate litigation and recovering money owed to creditors from individuals who pass away. If you are looking for an experienced New York and New Jersey estates lawyer to handle your creditor’s matter or other legal issue, please do not hesitate to contact The Rothman Law Firm to request a free consultation.