How does a small estate process address debts of the decedent?

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secondcor521
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How does a small estate process address debts of the decedent?

Post by secondcor521 »

As far as I know, in a typical probate process the will nominates and a probate court appoints an executor. The executor then causes to be published a notice to creditors in a local newspaper of record. This starts a clock for creditors that in my state appears to last four months. After that four months are up, then creditors who have not asserted their claims are essentially out of luck forever.

In a small estate process in my state (Idaho), there is no executor and no notice to creditors. I can't seem to figure out how, in this process, the beneficiaries assure that all debts of the decedent are identified in a timely manner and properly paid so that the remaining assets can be safely distributed and the estate considered closed.

In this particular case, assume that the decedent is a reasonably responsible and somewhat organized person, and that we are 99.9% but not 100.0% sure that the remaining debts would just be normal sorts of things: final credit card balances, final medical bills, utilities, health insurance premiums, that sort of stuff. And we'd cause those to be paid properly. But we'd also like to legally bar any future weird or scam things that might crop up by identity thieves or scammers or some bar bet from college 50 years ago.

Is there a way to "close the books" on future creditor claims without opening probate? Alternatively, is there any way to open probate only for the sake of the notice to creditors and not bother with any of the other probate requirements?

(If you're a lawyer and respond, I know you're not my lawyer and whatever you say is not legal advice and that I should consult an attorney of my choosing who is licensed to practice in my state. Yadda yadda.)
Joey Jo Jo Jr
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Re: How does a small estate process address debts of the decedent?

Post by Joey Jo Jo Jr »

Many (most/all?) states have a creditor deadline that applies even if probate is not opened. My state is 1 year after death for unsecured claims existing as of death. Sometimes heirs will wait that out on purpose, although creditors have the option to open the estate themselves if no one else does.

My state’s small estate procedure requires funeral expenses to be reimbursed but doesn’t otherwise directly protect other creditors. However, I think the other creditors could open the estate within the year and try to track down distributions, but I’ve yet to see one do so.
cubs1999
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Re: How does a small estate process address debts of the decedent?

Post by cubs1999 »

Joey Jo Jo Jr wrote: Tue Jun 28, 2022 11:29 pm Many (most/all?) states have a creditor deadline that applies even if probate is not opened. My state is 1 year after death for unsecured claims existing as of death. Sometimes heirs will wait that out on purpose, although creditors have the option to open the estate themselves if no one else does.

My state’s small estate procedure requires funeral expenses to be reimbursed but doesn’t otherwise directly protect other creditors. However, I think the other creditors could open the estate within the year and try to track down distributions, but I’ve yet to see one do so.
I'm not in Idaho. I've read a little about the laws in the state I live and as I understand it, creditors here have two years to collect from estate unless I do the newspaper notice and/or open the probate proceedings. I found a presentation from a law firm explaining the process from the creditor's point of view. If I don't probate the estate, the creditor can. I looked up the court cost and I believe it's $300 something in my county. There's nothing to probate so I won't be doing probate and I doubt the creditor will for a $300 cost to collect $1k debt so my plan is to do nothing for this estate.
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FreddieFIRE
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Re: How does a small estate process address debts of the decedent?

Post by FreddieFIRE »

cubs1999 wrote: Tue Jun 28, 2022 11:50 pm If I don't probate the estate, the creditor can. I looked up the court cost and I believe it's $300 something in my county. There's nothing to probate so I won't be doing probate and I doubt the creditor will for a $300 cost to collect $1k debt so my plan is to do nothing for this estate.
Yep. The "do nothing" option is rarely considered, but often appropriate.
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
RetiredAL
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Re: How does a small estate process address debts of the decedent?

Post by RetiredAL »

secondcor521 wrote: Tue Jun 28, 2022 10:07 pm
When DW's Mother passed, everything was in her Trust (Ca). DW was the successor Trustee and Executor, but everything was below even the small estate filing requirements. As with you, we were 99% certain there were no debt's other than routine card and store charges, none which were on-going. There were 4 siblings total.

Her house was sold, investments went to cash, we paid all her bills, and we reimbursed travel costs as all 4 went to Spain when she took ill. 80% was fairly quickly distributed, 15% at a year, and last 5% was held back for 2 years. Nothing additional ever surfaced.
carolinaman
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Re: How does a small estate process address debts of the decedent?

Post by carolinaman »

I was executor of my mother’s estate in VA. I reviewed my estate plan with the attorney who did her will and my POA. He said to hold back some funds for late bills until the 1 year anniversary of her death which I did to the disdain of my siblings. I did not do a newspaper advertisement that some have suggested.

Be aware that some medical bills may be very slow to be presented to you. My mother was in a SNF for about 6 months before she died. Part of that time was paid by Medicaid. I had to push VA Medicaid to determine what she owed as well as settling her account with the SNF and hospitals. Had I not pushed VA Medicaid, I doubt they would have billed her for quite a long time.
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Lee_WSP
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Re: How does a small estate process address debts of the decedent?

Post by Lee_WSP »

secondcor521 wrote: Tue Jun 28, 2022 10:07 pm As far as I know, in a typical probate process the will nominates and a probate court appoints an executor. The executor then causes to be published a notice to creditors in a local newspaper of record. This starts a clock for creditors that in my state appears to last four months. After that four months are up, then creditors who have not asserted their claims are essentially out of luck forever.

In a small estate process in my state (Idaho), there is no executor and no notice to creditors. I can't seem to figure out how, in this process, the beneficiaries assure that all debts of the decedent are identified in a timely manner and properly paid so that the remaining assets can be safely distributed and the estate considered closed.
https://legislature.idaho.gov/statutesr ... t15-3-801/

I'm not sure what you're referring to here. I quickly found this statute. Do you mean that in order to bar claims you cannot use the state's small estate procedure? If so, that is not uncommon. The small estate procedure (affidavit based) is designed for solvent estates. Informal probate under the UPC is what you use to bar creditors.
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secondcor521
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Re: How does a small estate process address debts of the decedent?

Post by secondcor521 »

Lee_WSP wrote: Wed Jun 29, 2022 5:59 pm
secondcor521 wrote: Tue Jun 28, 2022 10:07 pm As far as I know, in a typical probate process the will nominates and a probate court appoints an executor. The executor then causes to be published a notice to creditors in a local newspaper of record. This starts a clock for creditors that in my state appears to last four months. After that four months are up, then creditors who have not asserted their claims are essentially out of luck forever.

In a small estate process in my state (Idaho), there is no executor and no notice to creditors. I can't seem to figure out how, in this process, the beneficiaries assure that all debts of the decedent are identified in a timely manner and properly paid so that the remaining assets can be safely distributed and the estate considered closed.
https://legislature.idaho.gov/statutesr ... t15-3-801/

I'm not sure what you're referring to here. I quickly found this statute. Do you mean that in order to bar claims you cannot use the state's small estate procedure? If so, that is not uncommon. The small estate procedure (affidavit based) is designed for solvent estates. Informal probate under the UPC is what you use to bar creditors.
Thanks for your reply. Yes, I'm familiar with that statute, but that refers to regular probate. There appears to be no parallel law or provision for dealing with creditors for the small estate procedure (which is at https://legislature.idaho.gov/statutesr ... T15CH3PT12) that I can see. It may be that in the case of a small estate procedure, there is no executor, and thus no one standing liable to make sure creditors are dealt with? I don't know if other states deal with it differently, but the Idaho legislature apparently hasn't prioritized this particular issue.

I'm trying to achieve the goals of barring claims without opening probate. Barring claims so that the estate can be finalized, and avoiding probate because (a) the estate qualifies for small estate procedure and (b) it is faster, cheaper, simpler, more private, and easier to do remotely (the to-be-nominated executor lives out of state).

The estate will be solvent. The desire is to just know by a certain date that all outstanding claims against the estate are known. There's no desire to avoid paying claims. It's just that I've read stories about bills trickling in over years; if they're valid we'd want to pay them, of course, but I also don't want to be stuck in limbo for years. Limbo is avoided in probate by the statute you cited, but again, there doesn't seem to be the equivalent for small estates, even though there is clearly an intent of the legislature to have a simplified process for small estates.

Idaho does have a kind of informal probate I think. It seems that one can open probate, do some of the steps, and then just stop. The court apparently auto-closes and doesn't follow up if nothing is done for a while. In fact, I think my Mom's estate is that way - we did some of the steps but never formally closed it. The attorney seemed to think it wasn't needed due to this "auto-close" / "indifference" approach by our probate courts. Maybe we just need to open probate, get the executor appointed, then use the statute you cited and not worry about the 74,000 other items.
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Re: How does a small estate process address debts of the decedent?

Post by Big Dog »

secondcor521 wrote: Tue Jun 28, 2022 10:07 pm As far as I know, in a typical probate process the will nominates and a probate court appoints an executor. The executor then causes to be published a notice to creditors in a local newspaper of record. This starts a clock for creditors that in my state appears to last four months. After that four months are up, then creditors who have not asserted their claims are essentially out of luck forever.

In a small estate process in my state (Idaho), there is no executor and no notice to creditors. I can't seem to figure out how, in this process, the beneficiaries assure that all debts of the decedent are identified in a timely manner and properly paid so that the remaining assets can be safely distributed and the estate considered closed.

In this particular case, assume that the decedent is a reasonably responsible and somewhat organized person, and that we are 99.9% but not 100.0% sure that the remaining debts would just be normal sorts of things: final credit card balances, final medical bills, utilities, health insurance premiums, that sort of stuff. And we'd cause those to be paid properly. But we'd also like to legally bar any future weird or scam things that might crop up by identity thieves or scammers or some bar bet from college 50 years ago.

Is there a way to "close the books" on future creditor claims without opening probate? Alternatively, is there any way to open probate only for the sake of the notice to creditors and not bother with any of the other probate requirements?

(If you're a lawyer and respond, I know you're not my lawyer and whatever you say is not legal advice and that I should consult an attorney of my choosing who is licensed to practice in my state. Yadda yadda.)
In California, the Personal Representative files a death cert with the county of residence, adn this starts the clock for debtors to come out of the woodwork.
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Lee_WSP
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Re: How does a small estate process address debts of the decedent?

Post by Lee_WSP »

secondcor521 wrote: Wed Jun 29, 2022 8:13 pm
Lee_WSP wrote: Wed Jun 29, 2022 5:59 pm
secondcor521 wrote: Tue Jun 28, 2022 10:07 pm As far as I know, in a typical probate process the will nominates and a probate court appoints an executor. The executor then causes to be published a notice to creditors in a local newspaper of record. This starts a clock for creditors that in my state appears to last four months. After that four months are up, then creditors who have not asserted their claims are essentially out of luck forever.

In a small estate process in my state (Idaho), there is no executor and no notice to creditors. I can't seem to figure out how, in this process, the beneficiaries assure that all debts of the decedent are identified in a timely manner and properly paid so that the remaining assets can be safely distributed and the estate considered closed.
https://legislature.idaho.gov/statutesr ... t15-3-801/

I'm not sure what you're referring to here. I quickly found this statute. Do you mean that in order to bar claims you cannot use the state's small estate procedure? If so, that is not uncommon. The small estate procedure (affidavit based) is designed for solvent estates. Informal probate under the UPC is what you use to bar creditors.
Thanks for your reply. Yes, I'm familiar with that statute, but that refers to regular probate. There appears to be no parallel law or provision for dealing with creditors for the small estate procedure (which is at https://legislature.idaho.gov/statutesr ... T15CH3PT12) that I can see. It may be that in the case of a small estate procedure, there is no executor, and thus no one standing liable to make sure creditors are dealt with? I don't know if other states deal with it differently, but the Idaho legislature apparently hasn't prioritized this particular issue.

I'm trying to achieve the goals of barring claims without opening probate. Barring claims so that the estate can be finalized, and avoiding probate because (a) the estate qualifies for small estate procedure and (b) it is faster, cheaper, simpler, more private, and easier to do remotely (the to-be-nominated executor lives out of state).

The estate will be solvent. The desire is to just know by a certain date that all outstanding claims against the estate are known. There's no desire to avoid paying claims. It's just that I've read stories about bills trickling in over years; if they're valid we'd want to pay them, of course, but I also don't want to be stuck in limbo for years. Limbo is avoided in probate by the statute you cited, but again, there doesn't seem to be the equivalent for small estates, even though there is clearly an intent of the legislature to have a simplified process for small estates.

Idaho does have a kind of informal probate I think. It seems that one can open probate, do some of the steps, and then just stop. The court apparently auto-closes and doesn't follow up if nothing is done for a while. In fact, I think my Mom's estate is that way - we did some of the steps but never formally closed it. The attorney seemed to think it wasn't needed due to this "auto-close" / "indifference" approach by our probate courts. Maybe we just need to open probate, get the executor appointed, then use the statute you cited and not worry about the 74,000 other items.
This case has the answers you seek.

https://caselaw.findlaw.com/id-supreme- ... 85015.html

The long time to bar a claim is why informal probate is usually a worthwhile choice.
Topic Author
secondcor521
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Re: How does a small estate process address debts of the decedent?

Post by secondcor521 »

Lee_WSP wrote: Wed Jun 29, 2022 10:00 pm
secondcor521 wrote: Wed Jun 29, 2022 8:13 pm
Lee_WSP wrote: Wed Jun 29, 2022 5:59 pm
secondcor521 wrote: Tue Jun 28, 2022 10:07 pm As far as I know, in a typical probate process the will nominates and a probate court appoints an executor. The executor then causes to be published a notice to creditors in a local newspaper of record. This starts a clock for creditors that in my state appears to last four months. After that four months are up, then creditors who have not asserted their claims are essentially out of luck forever.

In a small estate process in my state (Idaho), there is no executor and no notice to creditors. I can't seem to figure out how, in this process, the beneficiaries assure that all debts of the decedent are identified in a timely manner and properly paid so that the remaining assets can be safely distributed and the estate considered closed.
https://legislature.idaho.gov/statutesr ... t15-3-801/

I'm not sure what you're referring to here. I quickly found this statute. Do you mean that in order to bar claims you cannot use the state's small estate procedure? If so, that is not uncommon. The small estate procedure (affidavit based) is designed for solvent estates. Informal probate under the UPC is what you use to bar creditors.
Thanks for your reply. Yes, I'm familiar with that statute, but that refers to regular probate. There appears to be no parallel law or provision for dealing with creditors for the small estate procedure (which is at https://legislature.idaho.gov/statutesr ... T15CH3PT12) that I can see. It may be that in the case of a small estate procedure, there is no executor, and thus no one standing liable to make sure creditors are dealt with? I don't know if other states deal with it differently, but the Idaho legislature apparently hasn't prioritized this particular issue.

I'm trying to achieve the goals of barring claims without opening probate. Barring claims so that the estate can be finalized, and avoiding probate because (a) the estate qualifies for small estate procedure and (b) it is faster, cheaper, simpler, more private, and easier to do remotely (the to-be-nominated executor lives out of state).

The estate will be solvent. The desire is to just know by a certain date that all outstanding claims against the estate are known. There's no desire to avoid paying claims. It's just that I've read stories about bills trickling in over years; if they're valid we'd want to pay them, of course, but I also don't want to be stuck in limbo for years. Limbo is avoided in probate by the statute you cited, but again, there doesn't seem to be the equivalent for small estates, even though there is clearly an intent of the legislature to have a simplified process for small estates.

Idaho does have a kind of informal probate I think. It seems that one can open probate, do some of the steps, and then just stop. The court apparently auto-closes and doesn't follow up if nothing is done for a while. In fact, I think my Mom's estate is that way - we did some of the steps but never formally closed it. The attorney seemed to think it wasn't needed due to this "auto-close" / "indifference" approach by our probate courts. Maybe we just need to open probate, get the executor appointed, then use the statute you cited and not worry about the 74,000 other items.
This case has the answers you seek.

https://caselaw.findlaw.com/id-supreme- ... 85015.html

The long time to bar a claim is why informal probate is usually a worthwhile choice.
Understood, thanks for the reply and the link!
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