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What are the consequences of making an at risk distribution?

Posted on Mon Jun 29, 2015, on Estate Litigation

From our “Ask a Question” mailbag: At Risk Contribution Consequences in Chester County, PA

Most Recently Updated July 15, 2018.

“I am the executor of my Mother’s estate in Chester County, Pennsylvania. I have advertised the estate and paid all the valid creditors, but a neighbor of my mother has made a claim for a five-figure sum of money that has no validity. Can I make distribution without paying him?”

At Risk Contribution Consequences in Chester County

The quick answer is yes, but the right answer is that you should not.

At Risk Contribution Consequences in Chester County

As the executor, you are free to make “at risk” distributions, meaning a distribution that may put you personally at risk. Any experienced Chester County probate lawyer should advise you that ignoring your mother’s neighbor could put yourself at risk. Remember, even when your attorney’s asking you to slow down or take a few extra steps, they’re trying to prevent you from causing yourself more problems later on. You might be motivated to close out your duties quickly, but that neighbor could make some major hassles for you—even if their claim’s not valid.

Pennsylvania is Creditor Friendly

To begin with, Pennsylvania is a rather creditor-friendly state. If the executor knows of a creditor’s claim made within the one-year period after properly advertising the estate, the executor must address that claim. If you do not, and if you distribute all the assets, the 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 will still have to pay for your time in court. As you have already distributed all the funds, those costs will likely come out of your own pocket. Worse, if the judge finds the claim valid, you could be paying for all the court time plus paying the cash claim yourself.

File a Formal Accounting

Instead, you are free to have an attorney experienced in Orphans’ Court litigation file a Formal Account with the Chester County Orphans’ Court. In this accounting your attorney will explain that there is a claim and 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 (and your personal property) are protected.

Further Estate Litigation Questions?

The at risk contribution is only one 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: At Risk Contribution Consequences in Chester County

I hope that this article was helpful in explaining consequences of an at risk contribution. 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.

Wills, Trusts, Probate, and Estate Litigation It’s All We Do!

Tags:

Chester County, creditor claims, Duties and Responsibilities, Estate Litigation, Estate Litigation Attorney, Estate Litigation Lawyer, Fiduciary Duty, Formal Accounting, Pennsylvania

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