Dealing With Creditor Claims in Estate Administration
How to Respond to Creditor Claims in Michigan
The personal representatives (PRs) of estates must notify several interested parties when the testator of a will dies. Notifying known and unknown creditors of the death is one of the first things a PR should do. Once public notice of the testator's death is published, all creditors have 4 months to make claims for repayment against the estate.
Creditors may include lenders, credit card companies, heirs, devises, tax collecting agencies, medical facilities, providers of funeral and burial services, legal service providers, accountants, investment advisers, or a plaintiff in a tort case against the estate. The PR may even be a creditor. Each party requires notice of death by a certain deadline.
When creditors make on-time claims against the estate, you (as the PR) have specific duties:
- First, you must review and scrutinize each claim for all information necessary to possibly pay the debt to the correct party and to validate the basis of the claim.
- The probate court may need to rule as to whether is claim received is an allowed claim.
- If there are enough assets in the estate to cover an allowed claim, you should pay the debt.
- If there are not enough assets to cover the claim, you must notify the creditor of the deficiency.
- At this point, you need an experienced estate and probate administration lawyer as counsel, if you do not already have one. Certain creditors must be paid before others and some creditors not at all, depending on each circumstance.
At Willis Law, each year serve hundreds of new clients in the drafting and amending of estate plans, wills and trusts. We serve personal representatives in the state and outside of the state, since every state has specific laws regarding the transfer of property and other assets within its borders that are held in wills and trusts, regardless of in what state the testator dies.
Please call our law firm at (888) 461-7744 to speak with one of our experienced estate administration attorneys today. All initial consultations are free of charge.
We are a team of top-rated attorneys who will provide you with straightforward answers and solutions in all situations.
Note: If you pay any claim prior to the end of the 4-month period (when the ability for creditors to make claims expires) or make a payment that violates the priority order of creditors, you may become personally liable should the estate become insolvent and an allowed claim cannot be paid.
Our services will provide you with peace of mind, legal protections and guidance you can depend on throughout the process of administration.
How Do You Notify Unknown Creditors?
Known creditors are those you will be able to reasonably find evidence of by looking back into the testator's (decedent's) records over the last two years. You will send them letters directly, notifying them of the death and that the estate has been opened.
Unknown creditors are those that you cannot find through reasonable means in a timely manner. This is the purpose of the public notice.
Exactly four months after the public notice is published, unknown creditors will be prevented from filing any claims for repayment of debts and collecting debts from the estate. You will personally be able to tell them that the claims period has expired and the estate is closed.
Speak With One of Our Attorneys at Any Time
With offices in Kalamazoo, Grand Rapids and Paw Paw, we serve clients with interests in estates throughout Western Michigan. Please call us at (888) 461-7744 or email us to schedule a meeting with one of our attorneys.
Michael J. Willis J.D., C.P.A.
Shaun P. Willis J.D.
Frank D. Willis J.D.
Donald H. Smith
Mariko C. Willis
Samuel R. Gilbertson J.D.
Verelle Kirkwood J.D.
Kristyn Meylenberg J.D.