If you’re designated as an executor, you will most likely have to manage and resolve creditor claims against the estate in question. Here are some main things you will need to know to handle creditor claims against an estate.
You Will Need To Notify Creditors
When you take on the administration of an estate for a loved one or a friend, you will need to notify all of the individual’s creditors that you’re aware of as soon as possible after the individual’s death. This can be challenging at a time of grief. Also, you’re legally required to notify the Pennsylvania Department of Human Services and advertise the estate in two local newspapers.
Assets That Can’t Be Taken
Classes of property that aren’t counted as assets to pay off debts are:
- Life insurance policies
- Individual Retirement Accounts (IRAs)
Statutes Of Limitations Have Exceptions
There’s a deadline of one year from the date of death for a creditor to file a claim against an estate. However, creditors can delay that limitation, which is called tolling. The statute of limitations on claims can be tolled in one of three different ways:
- Sue the estate
- Serve written notice to the executor regarding a claim
- Initiate a formal request to probate court requesting the account of the estate
If a creditor does not do any of these things within one year of the date of death, the executor may distribute the assets of the estate and not be held liable for the debt. The federal government has the longest reach into the estate, with the power to require payment of income tax debts up to 10 years old.
Be Careful With Liens
Liens on property get treated differently then debt claims. Liens on real estate and personal property are still in effect for the longest amount of time from these three conditions:
- One year after the death date
- Five years from the filing date
- Five years after the lien’s renewal
Seek Help To Sort Things Out
Even if the deceased left a well-written will, there might be details that you’re not sure how to handle. No matter how well prepared you are for your executor role some of the state and federal laws that apply to the deceased’s case could have you baffled. Save precious time and stay in compliance with regulations by retaining legal consult for the full resolution of creditor claims.