How a personal representative handles an estate’s debts

How a personal representative handles an estate’s debts

On Behalf of | Mar 28, 2022 | Estate Planning |

There are many responsibilities that fall to the personal representative of someone’s estate. Their job includes securing property, presenting financial and estate documents to the probate courts and even paying off debts on behalf of the estate.

Debts owed by the deceased individual become the obligation of the estate at the time of their death. The personal representative of the estate will have at least some degree of personal responsibility for those debts if they go unpaid.

What is the proper process for handling debts during probate administration in Minnesota?

You must notify the creditors

The first step that a personal representative must take to address debts is to notify creditors on behalf of the estate. In some cases, like with utility companies, you will simply need to transfer the account to someone else’s name and pay the remaining balance. Other times, you may need to provide death certificates and other documentation before the creditor will communicate with you.

The personal representative of the estate should notify all known creditors as soon as possible. However, in some cases, there are creditors that the representative will not discover through email correspondence or review of financial records. To notify these creditors, the executor will typically need to publish notice about proceedings in local newspapers. The creditors then have four months to make a claim or potentially lose their right to do so.

Even Medicaid has a claim to make

If the deceased received Medicaid benefits, their estate will also be subject to Medicaid estate recovery in addition to claims by creditors such as credit card companies. Even the house where a person lived could be subject to sale to repay Medicaid benefits.

For someone to qualify for Medicaid, they need to show financial necessity. Medicaid can then make a claim against their estate for any benefits paid on their behalf after they die. Like with private debts, these repayment claims usually preempt any right of inheritance claimed by family members.

The representative of the estate has a responsibility to use any estate resources to repay creditors before they distribute any property to beneficiaries. Taking the right steps will reduce personal risk as the representative of an estate handling probate proceedings in Minnesota.

William G. Peterson

Archives

FindLaw Network