An Executor of a Will manages the administration of a deceased person's estate. One of the Executor's main jobs during probate is to pay people or institutions who are owed money by the deceased person. Those people or institutions are called “creditors.”
Probate can be overwhelming because the Executor must pay creditors in a specific order. The Executor may not be able to pay every creditor. An Executor is personally liable if debts are paid out of order. This is why it is important for the Executor to follow the right procedures to avoid unnecessary problems and personal liability.
The Executor of an estate in probate must begin by searching through the deceased persons papers looking for creditors. Connecticut law is very specific about the proper way to provide notice to potential creditors of an estate. The Probate Court will publish notice in the local newspaper warning creditors to present their claims to the Executor. The Executor may give known creditors actual notice by mailing a letter to them. In Connecticut, an Executor can bar claims of creditors who do not present their claims within 90 days of the date of letter. In the letter, the Executor can require a creditor to submit an affidavit in support of the creditor’s claim.
Creditors have 150 days to file a claim in a Connecticut estate going through probate unless the Executor sends the creditor the letter described above. A creditor can’t just ignore the Executor and march into any court other than the probate court and get a judgment for payment. A creditor must first file the claim with the Executor. Once a claim is filed, the Executor must accept, reject or pay the claim within 90 days. If the Executor fails to respond to the claim within 90 days, the creditor must give 30 days advance notice to the Executor that it will bring suit on the claim. If the Executor rejects the claim or refuses to accept or pay the claim, the creditor can sue the estate in Connecticut Superior Court.
Priority of Claims in the Probate Process
Every state sets the priority of claims in probate. Connecticut sets the priorities in the following order:
- funeral expenses
- estate administration expenses
- claims due for the last sickness of the decedent;
- all lawful taxes and all claims due the state of Connecticut and the United States
- all claims due any laborer or mechanic for personal wages for labor performed within three months immediately before the decedent’s death
- other preferred claims
- all other claims (credit cards, personal loans, etc.) allowed in proportion to their respective amounts.
Executors must analyze the priority of each claim in the probate process. All creditors in a certain group must be paid before creditors in the next priority group can be paid. If there aren't enough funds to pay all the creditors in one group, then the payments are prorated among the creditors in that group. If the estate doesn't have enough money to pay all of its claims, the executor must declare the estate insolvent. The estate’s beneficiaries only receive a distribution once all the creditor claims have been satisfied.
Dealing with creditor claims during the probate process can be complicated and risky. If you make mistakes as Executor, you can be held personally liable. This is why it is important to have an attorney experienced in the probate process assisting you.
