One of the main responsibilities of a personal representative is to handle the debts of the decedent. Each state has its own established order of priority when it comes to paying the debts and creditors of an estate. The personal representative is required to pay any outstanding medical expenses, but only from the decedent’s final illness. Also, funeral costs, debts to creditors, and applicable taxes need to be paid. If you have questions about these steps, let our estate planning lawyers help.
The basic steps of Kansas probate process
In order to initiate the Kansas probate process, a petition needs to be filed in the county where the deceased resided at the time of death. After the petition is filed, the court will set a hearing and notice of that hearing must be published and mailed to all named heirs or beneficiaries. The person who is chosen to be the personal representative (executor or administrator) of the estate will take possession of the property included in the estate and create an inventory.
After notice of the death has been made, creditors with legitimate debts will be given time to submit a claim for payment. Valid claims will be paid from the estate before any other distributions can be made. The personal representative is also responsible for ensuring that all estate taxes are paid (if any are due) before any distributions can be made to heirs and beneficiaries. In order to complete the final step of the Kansas probate process, which is closing the estate, the personal representative will provide to the court an accounting of all transactions relating to the estate.
Prosecuting and defending against debts
Kansas probate law authorizes the personal representative to defend against any debts of the estate, as well as, prosecute any debts that were owed to the decedent. There can be some complicated issues, however. For example, there may be an issue of whether the decedent transferred property out of the estate before death in an effort to defeat a creditor’s claim. Fraud of that type requires proof of a certain state of mind, more specifically, the “intent to transfer with the objective of circumventing a debt.” This can be difficult to prove. Another complicated issue is how to pay a debt that is secured by the property of someone other than the decedent.
Priority of claims in Kansas
Claims are paid in probate in a certain order of priority depending on the class of claim. In most cases, administration expenses, funeral expenses, debts owed to the federal and state governments, and the expenses of the last illness of the decedent take priority over other claims. The specific order required for paying these claims becomes significant if the estate is insolvent.
Otherwise, when there are sufficient assets to pay creditors, the probate procedures provide adequate protection for the creditors’ interests. Once a timely claim is presented by the creditor, then the personal representative uses the probate assets to pay that claim. Beneficiaries are only entitled to distributions after creditors’ claims have been paid.
What happens when the estate is insolvent?
Not every estate will have sufficient assets to pay off the debts. When there are insufficient assets the estate is considered “insolvent.” This happens, in most cases, when the person’s estate is being passed on through non-probate transfers, or estate planning tools that avoid the probate process. That can create difficulties for the personal representative.
When a decedent’s family chooses not to initiate probate proceedings, it is left to creditors of the estate to initiate those proceedings, which can be costly. A creditor has the authority to initiate probate proceedings under the Uniform Probate Code, which considers such a creditor to be an “interested person.” Our estate planning lawyers are familiar with the probate laws and can help you understand how it all works.
Providing notice to creditors of the decedent’s death
Kansas probate law also requires that the personal representative provides adequate notice to creditors of the decedent’s death. The purpose is to allow creditors to make legitimate claims against the estate. All creditors the personal representative knows or has reasonable grounds to know exist must be contacted directly. As for those unknown creditors, notice must be published in the appropriate newspaper, so they also have the opportunity to make their claims. Providing proper notice to creditors is important because Kansas probate law only allows a certain amount of time for a creditor to make a claim against an estate.
Attend one of our free workshops today! If you have questions regarding estate debts or any other estate planning matters, please contact the experienced attorneys at Gaughan & Connealy for a consultation. You can contact us either online or by calling us at (913) 262-2000. We are here to help!