If you’re the beneficiary of an estate, you might be expecting a nice inheritance – but don’t go spending that money quite yet. Before heirs can receive their inheritance, the estate’s creditors must be paid. This typically occurs during the probate process, and it can reduce the amount that beneficiaries receive. In some cases, disputes may arise over who deserves what.
What Are the Steps to Probate a Will?
Probate is a legal process. It is overseen by the court to ensure that the estate is distributed in adherence with state law and the terms of the will, if there is one.
During probate, the executor of the estate will take an inventory of all the assets in the estate. Then the executor will pay any debts owed by the estate. The remaining assets will be distributed to the heirs. This may sound simple, but determining who is owed what can get complicated.
How Do You Know Which Creditors to Pay?
During the probate process, the executor of the estate must work diligently to determine which creditors are entitled to payment by the estate. This can involve going through the financial records to find creditors and contact them. It can also involve placing a notice in the local newspaper to give unknown creditors an opportunity to file a claim.
The creditors then need to be given some time to file the claim. The amount of time that is required will be determined by state law. In Oregon, creditors are given four months to make a claim after a public notice.
What Happens If There’s an Invalid Claim?
In some cases, a claim to an estate may be disputed. This is a big part of why probate is required – disputes must be resolved before the estate’s beneficiaries can receive their inheritance.
Creditors are expected to file their claim within the allotted time. The executor may decide to allow or disallow each claim. If the claim is valid and it is presented on time, the executor should pay it and receive a release of claim from the creditor. If the executor disallows a claim, the creditor may dispute this decision.
What If the Estate Can’t Pay All of the Creditors?
In some cases, the amount that the estate owes to creditors may exceed the value of the assets. When this happens, not everyone is going to get paid. The creditors will be paid in order of priority established under state law. Surviving spouses and children may also be entitled to a limited amount of the estate.
As you can see, estate law can be very complicated. Disputes can arise in many ways, and the executor must proceed carefully to ensure that they are meeting their fiduciary duties. This is why it’s important to have an attorney experienced in probate law. Contact Skinner Law for probate assistance.