How to Collect Debts Owed to an Estate
Conventional wisdom says that the most stressful and worrisome part of being the personal representative of the estate of a deceased person is paying the estate’s debts. Disputes over the validity of a decedent’s will are plenty stressful, but they are also relatively rare. Even if your relationship with your family is not always sunshine and roses, it is unlikely that one of your relatives will challenge the will. While paying debts on behalf of the estate is among the routine duties of the personal representative, some personal representatives of estates must also collect debts that were owed to the decedent at the time of his or her death. A Bronx estate planning lawyer can help you if you are representing an estate where someone owes a large amount of money to the decedent’s estate.
Personal Representatives Can Collect Debts, Too, Instead of Just Paying Them
During probate, the personal representative must fulfill the following duties before the estate can settle and the beneficiaries of the will can receive their inheritance:
- Presenting the will to the probate court or affirming that the decedent did not write a will
- Notifying all the beneficiaries listed in the will, as well as any other close family members of the decedent who are not named in the will, that the estate has been opened for probate
- Notifying known creditors to whom the decedent owed outstanding debts that the estate is open
- Publishing notices in the newspaper so that prospective heirs and creditors whose contact information the personal representative did not have may contact the probate court with their claims
- Filing a final tax return for the decedent
- Settling the decedent’s debts, which may or may not require the sale of assets belonging to the estate
Only after the decedent’s other financial affairs have been resolved can the estate settle and its assets be distributed to the heirs. If other parties owe money to the decedent, the personal representative should also make reasonable efforts to collect them, so that the money can become part of the estate and the heirs can inherit it.
How to Prove That the Debt Exists and That You Have the Right to Collect It
The burden of proof is on the personal representative to show the probate court that a debtor still owes money to the decedent. It is easiest to do this if there is written documentation. This can include a loan agreement or promissory note, or it can include checks written from the debtor to the decedent, with the memo line indicating that the check is an installment payment on a debt.
Pending Lawsuits Where the Decedent Is a Party
The settling of the estate can be delayed considerably if the estate is a plaintiff in a pending lawsuit. This most often occurs in the context of wrongful death lawsuits where the decedent died in a preventable accident and medical malpractice or product liability lawsuits where the decedent filed the lawsuit while suffering from the preventable illness from which he or she died.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can help you if people owe you money and the debt is likely to outlive you. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.