When a person dies, all debts must be settled. This process is part of executing an estate and may require an Allentown, PA attorney for settling creditor claims.
Understanding the Process of Settling Debt in an Estate
As the executor of an estate, you will have many responsibilities including the need to resolve all debts. This is true regardless of whether or not a will existed. The difference between a person dying away testate (with a will) or intestate (without a will) primarily comes down to whether the court decides who will handle the estates’ affairs. When there is no will, the court will name a personal representative, or executor. In any case, this person assumes a fiduciary role to the beneficiaries of the estate. It will be up to them to act within the financial interests of the estate. In order to do this, a strict process should be followed.
The Probate Process
Apart from filing documents with the probate court, the executor will be responsible to notify all service providers and creditors who may have an interest in the estate. As a settling creditor claims attorney in Allentown, PA might tell you, this step allows anyone with an interest to file a claim against the estate within the set period of time. The executor must also notify beneficiaries; afterwhich, an inventory of the estate must take place. The inventory will give the executor an idea of the estate’s value, and from this, debt can be settled. Keep in mind, some assets will not be part of the estate. These might include insurance policies, 401(k)s, and brokerage accounts.
Once this part of the process has begun, our Philadelphia probate attorneys might advise the executor in examining whether there are any claims on the estates’ secured debt. If there is, these must be settled. Only once all debts and taxes have been paid will the estate be distributed to beneficiaries.
Should no will exist, the intestate laws of Pennsylvania will apply. There are a number of rules relating to dying without a will in Pennsylvania. In general, if the decedent is survived by a spouse, the spouse will receive $30,000, plus a portion of the estate. Our Allentown, PA settling creditor claims attorneys can discuss the specifics of these laws with you during a consultation.
What if the Estate Cannot Pay All Debts?
When an estate does not meet the monetary obligations of creditors, the IRS, and claims from beneficiaries, the estate is said to be insolvent. It will then be subjected to abatement statutes. Generally, this means the debts are to be paid in the following order:
As soon as the estate’s assets have been depleted, remaining debts are discharged. Exceptions to this might include when:
In the event an estate has debts that exceed its assets, or any debts that give rise to questions, a settling creditor claims attorney in Allentown, PA should be consulted for advice. Call Klenk Law today.
Peter Klenk is the founding member of Klenk Law, a seven attorney boutique estate planning law firm. We serve clients in Pennsylvania, New Jersey, New York, Minnesota and Florida. Peter Klenk received his Masters in Taxation LL.M. from NYU Law School and his J.D. from the University of Minnesota Law School. He served his country in the Navy JAGC during Desert Storm. Easy to talk to, feel free to call Peter for an appointment. We will make the process as easy as possible!
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