If you are making your estate plans, you should think about whether your candidate to be your estate executor can handle the tasks required of him or her. Debt may be a particular concern of yours. If you owe money to different parties at the time of your death, your executor will have to handle any claims against your estate.
Just because you die, it does not mean your debts die with you. The Florida Bar explains certain actions an estate executor will have to perform in the event creditors come forward with claims.
Provide notices to creditors
First, your executor should make reasonable efforts to notify creditors about your estate’s probate proceeding. Once your creditors know about your death and your estate, they usually have three months in which to file a claim for unpaid debts.
Your executor should not forego notifying creditors in the hopes they will not notice your estate going through probate. If a creditor discovers later on that you have died and you have an estate pending in probate court, a judge may allow the creditor to file a late claim.
Object to creditor claims
If your executor believes that a claim against your estate does not have merit, your executor may file an objection. The creditor may then respond by filing a lawsuit to validate the claim. The court will then determine whether the claim is valid or not. Since this process involves litigation, your executor should be ready to have legal representation to defend the objection.
Pay off creditors
Once a court has determined that creditor claims against your estate are valid, your executor will pay them off using the assets in your estate. This must happen before your executor pays your beneficiaries. If not, creditors may hold your executor personally liable if your estate has no money left to pay your debts.
Knowing about duties to pay creditors may help you discuss these issues with your executor candidate. If you fear your debt could prove overwhelming for your executor, you could work out ways to pay off debt through your estate plans.