The idea that a probate creditor could seek payment from family members is a common fear in probate situations. This is made even worse when a probate creditor pops up demanding payment after an estate has been closed and the funds distributed to the family. Who has to pay them?
Fortunately, if everything is done right in the estate, and the probate court discharges the executor or administrator, Georgia probate law says the creditor is probably out of luck and no one is responsible to pay them.
How do you know if your estate was handled right? Below are the first things to check to eliminate common mistakes. Although there are more considerations, and more ways that a family member could become liable to a probate creditor, the list below provides a good starting point.
1. Confirm that the estate was formally opened with the probate court. Sometimes families will divide up the deceased’s property and then say the estate was “settled” even though no estate was ever opened with the probate court. If that is the case, then everyone who received property from the estate, and the person “in charge” may be liable to the creditor and could be forced to contribute to the bill.
2. If an estate was formally opened with the probate court, confirm that legal notice was posted in the newspaper to notify creditors. If no legal notice was placed, then the creditors can pursue their claims against the executor or administrator of the estate, and all heirs and beneficiaries that received property from the estate.
3. Ensure that all known creditor claims were handled properly. In order to give all creditors time to submit claims to the estate, Georgia probate law requires that an estate be held open for at least three months after the legal notice to the creditors is posted. In addition, if an executor or administrator knows about a creditor claim (even if the creditor did not file a formal claim with the estate), then the administrator or executor must pay the probate creditor or settle the claim in some way before closing the estate. If known creditor claims are not paid or settled, then the executor or administrator, and those who receive property from the estate can be liable to the unpaid creditors.
4. Make sure that the estate was formally closed and that the executor or administrator was truthful in all statements to the probate court. After an estate has been fully administered, Georgia probate law allows an executor or administrator to petition the court for a discharge from office and, if they meet the requirements, from liability. Filing this petition will require the executor or administrator to make several certifications to the court. One of those is a statement that all creditor claims were properly paid, except the ones disclosed to the court as having not been paid. If any information disclosed to the court is untrue, then the executor or administrator can be liable to the court and to unpaid creditors. The creditors may also be able to seek payment from those who received property from the estate.
5. Confirm that the executor or administrator was discharged from office and from liability. When the court enters a discharge order to close an estate, there are two ways for the court to do so. The court may simply discharge the executor or administrator from office, which closes the estate but does not prevent a creditor, heir, or beneficiary from going after the executor or administrator for bad acts at some point in the future. The second option is for the court to discharge the executor or administrator from office and from liability. When that happens, the executor or administrator cannot be held liable to new, unknown creditors, beneficiaries, or heirs for anything having to do with the estate, unless the executor or administrator was untruthful to the court.
These five items are not the only considerations, but they are the most important. If any one of them is missing, then the executor or administrator could be liable to pay the bill of the new creditor that has appeared.
If you are at all unsure about whether you have done everything right, we recommend that you speak with a qualified probate law firm to make sure you do not wind up in trouble with the probate court or become personally responsible for an estate creditor’s bill.
Learn Important Probate Essentials, including key things that go wrong in an estate, how to prevent them, and what to do if they happen.
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