Estate administration imposes many obligations on personal representatives. They must locate the will and submit it to the probate courts. They need to manage estate resources, which could include physically securing them or liquidating certain holdings.
They also have to make appropriate distributions from the estate. Often, personal representatives look forward to distributing inheritances to beneficiaries. Before that happens, however, they must first ensure that they fulfill outstanding financial obligations. The personal representative must provide creditors with an opportunity to make a claim for repayment.
What notice is necessary?
Some creditors are known creditors. They send regular invoices and appear on financial statements. As such, personal representatives can readily identify them and send them direct notice.
Other times, creditors may be harder to identify. To ensure that even unknown creditors have an opportunity to make repayment claims, personal representatives generally need to publish notice in a local newspaper where the decedent lived.
Generally speaking, they must run the notice at least once a week for three consecutive weeks to comply with state law. They must then wait for creditors to make claims and then appropriately distribute resources to creditors before making distributions to beneficiaries.
In cases where the estate has more debts than assets, personal representatives must ensure that they pay creditors in the proper order of priority. The failure to notify creditors and repay them with estate resources can sometimes lead to liability for the personal representative.
Understanding the requirements of probate proceedings can help personal representatives avoid liability and mistakes that could lead to litigation. Communicating with creditors is a key component of successful estate administration.