When your loved one dies, his or her estate will go through the probate process. If there's a will on file, after probate, the executor of the estate will distribute the assets according to the distribution plan laid out in the will. If there's no will on file, the assets will be divided according to Ohio intestacy laws.
During probate, creditors to whom the deceased owed money may file claims against the estate for money owed. Let's say a lender comes forward and claims your deceased father owed him or her $200,000 related to a business deal. Whether the estate pays the claim depends on its viability.
Example of a recent creditor claim against an estate
In the case of deceased pop star Prince, there has been a lot of confusion about the distribution of his assets - mainly because he died without an estate plan. In addition to the numerous potential heirs who have come forward, creditors have also made their claims against the estate.
In a recent filing by a creditor, a former lawyer - who represented Prince in his divorce - has filed a claim for unpaid bills. Lawyers representing the estate denied the claim, saying it was too old to pay as the claim involved a 10-year-old debt.
There was also another problem with the $559,000 claim for services rendered: It did not include any proof or itemization. According to the attorneys representing the trust, they have requested documentation and proof of the bill.
Ultimately, it's possible that the court will deny the claim for payment due to a 6-year statute of limitation on debt collection in the state of Minnesota, where the estate is being probated. In the state of Ohio, a similar 6-year statute of limitation applies to all debt collection activities. The judge hasn't ruled on the matter yet.
Defending an estate against creditor claims
Not all creditors' claims against an estate are legitimate. Heirs and family members can sometimes save hundreds of thousands of dollars - or more - if they can successfully defend an estate against illegitimate claims. With the aid of an experienced probate litigation lawyer, Ohio residents can formulate a plan of action in this regard.