When O.J. Simpson passed away recently, he left behind several unpaid creditors. Two high-profile creditors are the Goldman and Brown families who have unsatisfied civil judgments from their wrongful death lawsuits. A resident of Nevada, Simpson’s will has been submitted to the court there for probate. The probate process is required before his estate can be distributed to his heirs, and it provides an opportunity for creditors to enforce their claims against the estate. It is unclear what assets Simpson has. If any assets were transferred into a trust in order to avoid creditors, such transfers are usually voidable as against the known creditors. It will be the responsibility of the executor of the will to determine what assets are available and address creditor claims before distributing the estate as required under Nevada law.
Executor’s Duties Regarding Creditors in Probate
Many individuals pass away owing money. Whether it’s an unpaid credit card bill, mortgage, or open judgment like O.J. Simpson’s estate, there are procedures for handling creditors in probate that are established by state law. Under these laws and procedures, the personal representative of the estate or executor has several duties that relate to creditors, including a duty to:
- Inform creditors of the decedent’s death and probate
- Identify creditors even if they have not filed their claim with the estate
- Vet the validity of claims
- Respond to claims
- Defend the estate against invalid claims.
Identification of Creditors
The personal representative/executor will typically have documentation of claims from the decedent, such as bills, judgments, and tax filings. However, some claims may not be reflected in the record. In such instances, the personal representative/executor must determine the veracity of any claims raised during the probate process by investigating the claims and finding corroboration. In some cases, litigation may be necessary to determine whether a creditor’s claim is valid.
Filing Creditor Claims
Most claims are filed with the probate court which has jurisdiction over the probate of the estate. While the procedures are governed by state law, the overall process is similar in all jurisdictions. Claims may involve torts, contracts, taxes, funeral bills, or other matters. Creditors must then serve their claim on the personal representative/executor. Failure to properly file and serve the claim can lead to loss of the right to enforce the claim.
Creditor Claim Period
Creditor claims must be filed within a certain timeframe. The limit exists to allow for the estate to be finalized and closed. Deadlines vary by the type of claim and the jurisdiction. Once the claim period ends, the heirs/beneficiaries are protected from new claims being asserted.
Responding to Claims
The personal representative/executor must decide whether to accept or reject each claim in accordance with the state’s probate procedures. Claims must be reviewed for validity, accuracy of the amount, and timeliness (i.e., the statute of limitations has not run out). If the claim is disputed, the personal representative/executor must defend the estate and resolve the dispute via settlement or litigation.
You don’t have to be O.J. Simpson’s executor to have problems with creditors. If you are a personal representative/executor, it is critical that you address creditor claims as required by state probate laws and procedures to avoid liability. You must be transparent and accountable for how you handle probate and keep accurate records of your administration and claims.
If you need assistance with probate, contact us for a consultation.
