The executor of an estate is responsible for managing and distributing the deceased’s assets. This means that the executor also must handle any creditor claims that arise during probate.
Addressing these claims appropriately will resolve the estate’s debts and protect the interests of the beneficiaries. Following Maryland’s probate laws closely will help the executor avoid unnecessary complications.
Notify creditors as required by law
The first step involves notifying potential creditors of probate. Maryland law requires executors to publish a notice in a local newspaper. Executors must also directly notify any known creditors, ensuring they have an opportunity to file their claims. This notice informs creditors that they have six months from the date of the decedent’s death to submit their claims.
Review and verify claims
Once creditors submit claims, the executor must carefully review them. It is important to confirm the validity of each claim and verify that it aligns with Maryland law. This process involves reviewing invoices, contracts or other documentation provided by the creditors. Executors have the authority to reject claims that appear invalid or excessive, but they must document their decisions thoroughly.
Prioritize payment of debts
Maryland law establishes a specific order of priority for paying debts. Executors must pay administrative costs, such as probate fees, first. Next, they must address funeral expenses, family allowances and taxes owed by the estate. The remaining funds will then go toward paying other creditors based on the order of priority. Executors must only pay these debts from the estate’s assets and not from their personal funds.
Resolve disputes
If creditors disagree with the executor’s decision to reject a claim or the amount paid, disputes may arise. Maryland law provides methods for resolving disputes during estate administration. Executors will have the opportunity to present evidence supporting their decisions in probate court. Handling disputes promptly helps avoid delays in the estate’s administration.
After resolving all creditor claims and paying valid debts, the executor can distribute the remaining assets to the beneficiaries. Addressing all debts will protect the executor from personal liability and help the beneficiaries receive their rightful inheritance.