By David Baron
Individual debt does not disappear simply because one dies. Companies and entities that have extended credit to that individual may assert their right to collect their one against that person’s estate. Although, this must be done in a timely manner.
Give Notice to Creditors
Once the individual has passed, the executor of the estate must give notice to creditors. This is necessary in order to eradicate all debts before the estate has been dispersed and closed. Typically creditors are given four months from the time the estate was opened, or 2 months from the date of their notice.
One of two things will then happen. First, the creditor will be paid their debt in full. The second option is a dispute on the debt and a refusal to pay. The creditor will then be allowed 3 months in order to dispute the rejection with the filing of a suit.
Options to Pay or Dispute for Trustees
The trustees of the estate have the option to either follow the prescribed rules set forth by the creditor. If they choose not to, then the creditor will have up to one year to file their claim against the estate.
An executor typically sets all clams against the estate aside. They are then reviewed to determine their legitimacy. A Palm Springs estate planning law firm can aid with determining which claims are legitimate. If a claim is paid that is not legitimate, the executor can be held responsible.
Denied claims are not final through the executor. The creditor can file a claim in court and have a judge determine whether or not they should be paid.