Minnesota Probate Payment of Bills of the DeceasedIn a Minnesota probate, the property of a decedent (the deceased person) passes at his or her death to the people named in the will (or Trust) or the decedent’s lawful heirs.  The property is also subject to a spousal elective share right, expenses of administration, and “rights of creditors”.  In this article, we are going to discuss the “rights of creditors” or how to properly pay the last bills of the deceased.

Payment of Creditor Claims

The claims provision of the Minnesota probate code “balance” the laws incentive to distribute the decedent’s estate against the right to be repaid lawful debts.  As an aside, the law is also clear that estate’s are supposed to be “wrapped-up” as quickly and efficiently as possible while still protecting the rights of those who claim an interest in the deceased’s property.

Below are some initial steps that a personal representative (often referred to as an “executor”) should take when dealing with debts of the estate:

  1. Identify the Creditors:  the personal representative needs to make a list of all parties to whom the deceased may have owed money.  The names and addresses of the parties should be provided to the probate attorney so that proper notice of the existence of the estate can be given to the parties.
  2. Identify the Nature of the Debt:   the personal representative should figure out if the bill is justified and valid.  If not, the bill can be contested or potentially reduced.
  3. Provide a Mechanism for Resolving Disputes:  the personal representative should work with the probate attorney to discuss how to resolve any bill disputes;
  4. Determine the priority of the various parties who may be entitled to some of the decedent’s property;
  5. Determine a method of payment of the bills of the deceased.

Minnesota Law

The law associated with creditor claims, for the most part, is contained in Minnesota Statutes 524.3-801 through 524.3-817.  Please review the specifics of the law for details on payment of creditor claims.

The definition of what constitutes a “claim” is contained in Minnesota Statute § 524.1-201(8).  The law provides that “claims include liabilities of the decedent whether arising in contract or otherwise,” and/or “liabilities of the estate which arise after the death of the decedent including funeral expenses and expenses of administration.”

Free Initial Consultations

Contact the Flanders Law Firm today.  The firm offers free consultations to all potential clients.  Call (612) 424-0398.

Minnesota Probate LawyerWhen many people sit down to create an estate plan, a common motivating factor is the desire to avoid probate. We’ve said it before and we’ll say it again, probate is a long and cumbersome process that is, usually, good to avoid. It costs money, it wastes time, it can be terrible for small businesses and it’s public, meaning details of your family and estate are available for others to peruse. In short, there are many reasons why your family might benefit from avoiding the inefficiencies of the system.

Though it’s often good to steer clear of the probate process, it is critical that you do so thoughtfully. Working with an attorney to plan out how you want your estate to be managed after you’re gone is wise. Taking shortcuts that could end up causing far more trouble than the probate process itself? Not so much. To learn more about two common probate avoidance shortcuts that you should be aware of, keep reading.

Housing | Minnesota Probate

One of the assets that that people most often worry about is real estate. They want to be sure their home (or second home or rental properties, etc.) doesn’t get tied up in probate court, forcing family members to spend time and money getting it out. To avoid the hassle of probate, some will simply transfer the home to a child while they are still alive. This can be a good thing, in some cases. However, there are a number of serious potential pitfalls.

For one thing, if your child is now the owner of the home, then he or she is able to make decisions about what happens to the property, including if it gets sold. That means you can get cut out of crucial decisions about your home and your future, if the child chooses to do so. Though you may not worry about this risk, understandably willing to trust your child, there are others.

What if your child declares bankruptcy? In that case, your house could be sold off to pay creditors. If, for example, you become ill and need medical assistance under Medicare, you might not be eligible if the transfer occurred around the same time. Another concern is that if your child were to pass away before you, the house would be transferred to his or her heirs, rather than yours.

Banking | Minnesota Probate

Another common approach for probate avoidance is to add a child’s name to your bank account. This can be helpful in that the child is allowed to pay bills on your behalf and automatically becomes an owner of the account in the event of your death. That said, potential problems abound.

Again, if trust is even remotely a concern, this should be avoided at all cost. By becoming an owner of the account, your child could do as he or she wishes, including stealing every last penny. Even if you trust the child totally, harm lurks in the form of creditors or others that your child may owe money to. If your child divorces or is involved in an accident or owes money to creditors, all could result in a judgment seizing your money to satisfy your child’s obligations.

Minnesota Probate Lawyers | Free Initial Consultations

Though many of these risks are speculative, that doesn’t mean they shouldn’t be seriously considered. These kinds of issues occur all the time and should be thought through before moving forward. An experienced Minnesota estate planning lawyer can help walk you through the complicated process of establishing a workable estate plan. For more information on estate planning in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 424-0398.

Source: “Shortcuts to avoid probate that can cost more than money,” published at GJSentinel.com.