Can I distribute estate assets if a claim is pending?
Posted on Mon Jun 8, 2015, on Estate Litigation
From our “Ask a Question” Mailbag: Lehigh County Asset Distribution Before Claims are Paid
Most Recently Updated July 14, 2018.
“I am the executor of my mother’s estate in Lehigh County, Pennsylvania. I have advertised the estate and paid all the valid creditors, but a neighbor of my mother has made a claim for $10,000.00 that has no validity. Can I make distribution without paying him?”
Lehigh County Asset Distribution Before Claims are Paid
Although it’s technically possible, the correct answer is that you should not.
“At Risk” Distributions
As the executor, you are free to make “at risk” distributions. That means if you later lose a claim, you’re personally at risk. Keep in mind, Pennsylvania is a rather creditor-friendly state. Your Lehigh County probate lawyer exists to keep you out of trouble, and should advise you weigh the long-term financial risks against any short-term desire to distribute those assets. You might not think that your mother’s neighbor has any right to those funds, but consider what could happen if he gets his claim in front of a judge.
If you, as the executor, know about a creditor’s claim made within the one-year period after you properly advertised the estate, then you are expected to address that claim. If you don’t, and you then distribute all the assets, that creditor can petition to force you to account and explain why he was not paid.
Even if you convince the judge that the claim is invalid, you’ll still have to pay for the time in court. Since you already distributed all the funds, those costs may come out of your own pocket. Worse, if the judge finds the claim valid, you could end up paying for all the court time plus paying the $10,000 claim yourself.
Consider Hiring an Experienced Attorney
Instead, you’re free to hire an attorney experienced in Orphans’ Court litigation to file a Formal Account with the Lehigh County Orphans’ Court. In this accounting, your attorney will explain that there is a claim and that you question its validity. You will then have a hearing where the judge will listen to both sides and make a ruling. If you follow the ruling, then you’re personally protected from paying out that claim.
Further Estate Litigation Questions?
Creditor claims are only a piece of many Estate Litigation issues our firm addresses. Consequently, if you want to learn more, please read my more detailed article, Trust and Estate Litigation All You Need to Know.
In Conclusion: Lehigh County Asset Distribution Before Claims are Paid
I hope that this article was helpful in explaining creditor claims and the effect of distributions. Further, I included links to even more detailed information on my website. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!
Let our Litigation Lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced Litigation Attorneys. By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to put our 25 years of estate litigation experience to work for you.
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Tags:Breach of Fiduciary Duty, creditor claims, Executor, Glen Ridenour, Lehigh County, Pennsylvania, Standard of Care for Fiduciaries