How to Handle Creditors’ Claims as an Executor or Trustee
As an executor or trustee of an estate, it is your responsibility to handle the creditors’ claims process. This includes notifying potential claimants, paying valid claims, and ordering the payment of expenses and claims.
If you were appointed to serve as a trustee or executor of an estate, attorney Steven H. Peck can provide guidance on the best practices for handling creditors’ claims and help ensure that you fulfill your fiduciary duty to the estate and its beneficiaries. If you need qualified and competent assistance in managing the estate administration process, reach out to attorney Peck’s office in Riverwoods, Illinois. Peck’s law firm serves clients throughout Cook County & Lake County, Illinois.
The Role of Trustee/Executor to Notify/Search for Claimants
The first step in handling creditors’ claims is to notify potential claimants. You should make sure that all known creditors are notified of their right to file a claim. Additionally, it is important to conduct a search for unknown claimants by publishing a notice in newspapers and other publications with wide circulation in the area where the decedent lived in order to reach any unknown claimants who may have a valid claim against the estate.
According to the official website of the Nineteenth Judicial Circuit Court in Lake County, IL, the executor of the estate has an obligation to publish a written notice in a newspaper. The notice serves two purposes: to search for potential claimants and notify them of their right to file a written claim against the estate. Illinois law gives creditors six months to submit their claims.
Payment of Claims
Once you have identified all potential claimants, you must determine whether each claim is valid or invalid. A valid claim must be supported by documentation such as a contract or invoice that shows the amount owed and how it was incurred. Once you have verified that a claim is valid, you can begin making payments once sufficient funds are available from assets being sold or distributed from trusts established under wills or other documents.
Disallowance of Claim
If, after reviewing all documentation related to a particular claim, there is not enough evidence to support it, it might be disallowed and rejected as invalid. When rejecting a claim, it is important to provide written notice with reasons why the claim was disallowed so that, if needed, legal action can be taken against those making invalid claims against the estate without sufficient proof of their entitlement.
Order of Payment of Expenses and Claims
When determining which expenses should be paid first from an estate or trust fund, there are specific rules governing payment priorities set forth by the law. Generally speaking, debts related to taxes will take precedence over other expenses, while debts related to court costs will take precedence over those associated with funeral costs and other miscellaneous expenses related to managing an estate or trust fund, such as attorney fees or executor fees. Creditors’ claims may also need special attention depending on what type of asset they are associated with (real property vs. personal property).
How Can an Attorney Help During Estate/Trust Administration?
When an individual is appointed to serve as a trustee or executor of an estate, they are tasked with the responsibility of managing and administering the estate. This process can be complex and time-consuming, so it is essential to know where to turn for help if needed. An attorney can help in several ways:
Explain your duties, rights, and responsibilities. An estate administration attorney can help trustees and executors understand their duties, responsibilities, and rights under state law.
Prevent and resolve any potential conflicts. To protect the interests of all parties involved, attorneys can provide advice on any potential conflicts that may arise during the administration of an estate.
Drafting documents, filing taxes, and handling creditors’ claims. Attorneys can also assist with drafting documents, filing tax returns for the deceased’s estate, resolving creditor claims against the deceased’s assets, making sure all debts are paid off before funds are distributed among beneficiaries, and much more. Additionally, attorneys can review any documents prior to signing them to ensure they meet legal requirements.
Keeping accurate records. It’s critical for trustees and executors to keep accurate records throughout the administration process. An attorney can provide guidance on what records need to be kept and how long they must be maintained for tax purposes or other matters related to settling an estate.
As you can see, there are a number of things a knowledgeable attorney can help you with if you were appointed to serve as a trustee or executor of an estate.
Speak With an Experienced Attorney
Managing creditors’ claims as an executor or trustee requires diligent research and knowledge of applicable laws in your state. If you were appointed as a trustee or executor of someone’s estate in Illinois, contact The Law Offices of Steven H. Peck, Ltd., for legal guidance. Attorney Steven H. Peck is an estate administration attorney who assists executors and trustees in performing their duties when administrating a deceased person’s estate. Reach out to attorney Peck’s office today to book your free consultation.