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Why executors should deal with estate debt early

Posted by Lidia Law Firm, P.C. | Dec 12, 2018 | 0 Comments

It is common for people to die with some debts still outstanding. However, just because someone in Oklahoma dies, it does not mean that the debts that person incurred in life die as well. Since those debts can come back to haunt the estate of the deceased, the executor of the estate should be proactive in alerting creditors that their debtor has passed.

According to Forbes, an executor might need to publicly advertise the existence of the estate. By placing an advertisement in a newspaper or using whatever means are permitted, an executor is making it easier for creditors to learn about the estate and that they can approach the executor for the outstanding money. If necessary, the creditors may contest for the assets of the estate in court or negotiate for a settlement.

Some executors may wonder if they can keep the matter of the estate quiet until the assets of the estate are dispersed. If the creditors should discover the existence of the estate afterward, there would be no assets to pay the debt. However, this will not stop creditors if they believe the executor mishandled the estate. In fact, some creditors may pursue claims against the executor directly. Without assets from the estate, the executor would be on the hook to pay the debt.

Executors may run into problems in a number of ways. Since they are responsible for overseeing the estate, they have a responsibility to catalog the debts of the deceased. If they intentionally neglect this duty, they might be held liable for unpaid debts. Also, in the event an estate cannot pay all the outstanding debt, a judge will likely prioritize which debts are to be paid. However, InCharge warns that an executor who pays one creditor ahead of another could be in violation of state law.

Ultimately, anyone who is put in charge of an estate should take all appropriate steps to find and resolve outstanding debt so that unsettled money matters do not spring up in the future. Since an executor can be sued personally for mishandling an estate, consulting with a professional estate attorney should be considered to head off potential problems.

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