Financial debts can be a significant burden during a person’s life, affecting their peace of mind and financial stability. Whether it’s credit card debt, medical bills or loans, these obligations can cause stress and limit one’s ability to enjoy financial freedom.
When a person dies, this financial burden doesn’t simply vanish. Instead, the responsibility for repaying debts is transferred to their estate. During the probate process, the estate’s assets are often used to settle any outstanding obligations before anything is distributed to heirs or beneficiaries.
The probate process and creditor claims
When someone dies, their estate typically enters probate, a legal process in which a personal representative (the executor) is appointed to manage the affairs of the person who died (the decedent). One of the key responsibilities of the executor is to notify creditors of the decedent’s death and provide them an opportunity to file claims. In Kentucky, creditors generally have eight months from the date of the decedent’s death or six months from the date of the executor’s appointment to submit claims to the estate (whichever happens earlier). If the creditor receives notice from the executor, then the deadline to submit claims is shortened to 60 days after the notice has been received.
How creditors file claims
Creditors can submit informal claims to an estate by sending a bill to the decedent. If the executor does not pay the bill, or if the creditor decides to skip making an informal claim, the creditor may submit a formal claim to the probate court. When submitting a formal claim, creditors must provide proof of the debt owed, such as bills or contracts. If the claim is approved, the executor will use estate funds to settle the debt. If there are insufficient assets to pay all creditors, the estate may follow a priority order, with certain debts (such as funeral expenses and taxes) taking precedence over others.
What happens if the estate cannot pay?
If the estate does not have enough assets to cover all debts, creditors may not receive full payment. In some cases, creditors may write off the remaining balance. Heirs or beneficiaries are usually not personally liable for the decedent’s debts unless they co-signed or were otherwise responsible.
Financial debts must be settled after a person has passed away. Creditors are allowed to file claims to an estate within a required time frame that helps ensure debts are settled before distribution to heirs. Seeking legal guidance can help executors settle debts for their decedent correctly and in accordance with the law.
