Beware of Hidden Creditors

 

Creditors can be an unavoidable nuisance in life. In death, there is still no avoiding them as they can make claims against a deceased person’s estate. In fact, if you have been named the executor of an estate greater that $100,000, or if you plan to become the administrator of an estate without a will, you will soon become very familiar with creditors and their rights throughout the probate process.

 

The probate process is conducted in a designated court in the county where the deceased lived. This process has very specific requirements—which are outlined in the Illinois Probate Act of 1975. Among these requirements is that the executor of the will or the administrator of the estate file a petition to open a probate estate, and to provide notice of this petition and hearing to any heir or legatee named in the will or described in the Probate Act. Also, notice must also be given to creditors.

 

Creditors Must Be Notified

 

Illinois law requires notification by publication in the local newspaper to inform the public and possible creditors of their right to make claims against the estate in court. In addition, the executor or administrator is responsible for conducting due diligence by examining documents, records, and personal effects of the deceased to discover creditors. The reason for this diligent search is that all known creditors, or creditors who can be “reasonably ascertained,” must be directly notified of the probate proceedings. This applies to creditors who you want to bar from collecting from the estate. Creditors will then have a six-month deadline from the date of the publication (or three months from the delivery of their notice) to file a claim against the estate before they are barred from relief.

 

The significance of these notice requirements cannot be understated as failure to adequately notify a creditor can result in long delays in the resolution of the probate estate. If you fail to inform a known creditor or a creditor who you should have reasonably ascertained during your diligence, the standard deadlines are not valid. Instead, those creditors will have up to two years to file a claim. Also, if it is found by the court that you did not act in good faith, i.e., you intentionally failed to notify a known creditor, you may open yourself to personal liability.

 

Some Free Advice

 

If you are planning your estate, it is critical that you fully inform your attorney of every creditor who may have a claim against you and your estate. You must include the contact information for these creditors, any relevant paperwork regarding the debt, and a current estimate of the amount owed. Failure to inform your attorney of readily ascertainable creditors could subject your estate to unintended delays and penalty.

 

If you are the executor or administrator of an estate, especially a large estate, it is critical that you seek the advice of counsel. The bottom line is that you may miss a creditor that would be obvious to a lawyer who has done this for years. An experienced attorney will assist you in exercising due diligence required by law to identify creditors and to provide them with proper notice. The last thing you want to do is delay the probate case or open yourself up to personal liability.

 

Don’t miss a hidden creditor. Avoid delays and penalties. Let us help you perform your due diligence so that there are no surprises. With over two decades of legal experience in estate planning, probate law, and tax law, the Law Offices of Robert S. Thomas can take you through the probate process. My team and I want to get things right the first time and can assist you from start to finish. Call us today at 847-392-5893 or visit our website to set up a consultation.

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