Can I Start Paying Creditors as Soon as I Get a Hold of the Decedent’s funds? If not, when?
April 16th, 2020 in FAQs Categories: Estate Planning
Follow the Statutes and Paying Creditors With Funds
As eager as we are to close out all open matters with a loved one’s estate, there are statutes that all interested parties have to adhere to. This includes timelines and processes that may work in our best interest, but also we need to Paying Creditors With Funds we received. But, as the saying goes, there’s a reason why “we can’t have nice things.”
Notice to Creditors Required
Although it’s understood that your loved one’s probated assets are subject to creditor claims, it should never be assumed that all creditors are known at the start of probate. For this reason, it is required that a Notice to Creditors ad is scheduled to run for four consecutive weeks in the newspaper, to reach out to not just potential and unknown creditors, but potential and unknown debtors, as well. With this ad, three (3) months are given to each (known and unknown) creditor and debtor of the estate to file a claim or come forward with a current invoice to address their claim. Upon the end of the three (3) month window, any creditors who file a claim thereafter may be barred from further attempts to collect. With this being said, always document when you’ve received the notices or letters from the creditors and keep track of the date of the mail stamp, and hold onto all envelopes which may document the date the letter was actually in transit and how long it took to receive it.
Three-Month Waiting Period
Following the three (3) months, you’ll be able to view the total debts compared to the total liquid assets you have available to pay the creditors. This will allow you to determine if you have sufficient funds to satisfy all creditors of the estate. Please see the following statute to reference the order in which creditors should be paid: NCGS§28A-19-6. Be reminded, that if there is a claim for a yearly allowance on file, that must be satisfied before any creditors of the estate. Currently, NC allots an allowance of $60,000.00 to the surviving spouse of the estate and $5,000.00 to each child born of the decedent. Thus, if the full amount is due to the surviving spouse and the children, it must be documented that this was satisfied.
To better understand this process and to know if you’re addressing creditors correctly, we welcome you to schedule a consult with one of our estate administration attorneys to see if you’re in compliance with the letters you’re sending to creditors, and any future correspondences planned with creditors of the estate.