After opening a probate estate, a Personal Representative has a duty to provide legal notice to any creditors of the decedent. A Creditor is a person or entity to which the decedent owes a debt. Creditors of the estate may include unsecured debt (examples include utilities, credit cards, medical bills, personal loans) and secured debt (examples include mortgages and automobile loans).
A Personal Representative has a duty to provide notice to known and unknown creditors.
Creditors: Notice to Unknown Creditors
Generally when an estate is opened, a notice is published in the local, legal newspaper for unknown creditors. The publication period is four months. An Affidavit of Publication is then filed with the probate court which verifies the date of the publication. Unknown creditors have four months from the date of publication to present a claim against the estate. After that date, claims of unknown creditors are forever barred.
Creditors: Notice to Known Creditors
Notice to any known creditors must be sent directly to the creditor using a specific, statutory form. A creditor is considered known to the Personal Representative if the Personal Representative has actual notice of the creditor or the creditor’s existence is reasonably ascertainable based on an investigation of the decedent’s available records for the 2 years immediately preceding death and upon review of the decedent’s mail following death. Therefore, it is important for a Personal Representative to file a Official Change of Address with the United States Post Office and to review the decedent’s mail carefully.
Creditors: Claims of the Personal Representative
If the creditor claim is a claim by the Personal Representative, the Personal Representative must give a copy of the claim to all interested persons not later than 7 days after the time for the claim’s original presentation expires. The claim must contain a warning that the Personal Representative’s claim will be allowed unless a notice of objection is delivered or mailed to the Personal Representative within 63 days after the time for the claim’s original presentation expires. This subsection does not apply to a claim for compensation for services rendered or for reimbursement of expenses advanced by the Personal Representative.
Creditors: A Case Study
The Michigan Court of Appeals in Besemer v. Fjerstad’s Estate emphasized that a probate estate cannot be properly closed if notice has not been given to all potential creditors. In Besemer, the plaintiff had been injured after she slipped and fell on the decedent’s property prior to the decedent’s death. After the decedent passed away, her Personal Representative failed to give notice to the plaintiff and the estate was closed. When the plaintiff filed suit, she discovered the decedent’s death and petitioned the probate court to reopen the estate. The case eventually made its way to the Court of Appeals where the court ordered the probate court to re-open the estate. Besemer demonstrates the importance of properly giving notice to creditors so you can avoid the headaches involved in re-opening an estate.
Providing the appropriate notice to creditors is a critical step in the effective administration of a probate estate. By retaining The Probate Pro, as Personal Representative you can ensure that the requirement of addressing both known and unknown creditors in a probate estate will be fulfilled.
Call The Probate Pro: (248) 399-3300 – toll free: (877-YOUR FIRM)