When your loved one dies, there’s a good chance you may be responsible to settle their estate. An estate is just what you call the process of paying your loved one’s debts and distributing their assets. The person in charge of this process is called the executor or the administrator.
Some of the main responsibilities of the executor is gathering the assets of the estate. Once the assets are gathered, you have to have them appraised. This way, you’ll know how much the estate is worth. Once the worth is determined, you need to start paying the creditors of the estate.
Since the heirs can’t receive their inheritance until all the creditors have been paid, it’s important that you do this as quickly as possible. Especially since, chances are, you’re one of the heirs waiting on your inheritance.
One way to make sure you handle the estate properly is to retain a probate lawyer in Houston. They can help you throughout the entire probate process.
Who are the Creditors of the Estate?
Before you can distribute your loved one’s assets, you need to satisfy all the creditors of the estate. These are the people or companies who claim your loved one owed them money when they died.
In order for the creditors to know your loved one passed away, you have to provide them with notice. This is done by sending them Notice to Creditors forms. This will let them know your loved one has died. It will also give them the estate and contact information.
Once the creditors receive their Notice, they can start filing their creditor’s claims. These are official papers stating how much they were owed. Some of the more common creditors include the following:
- Mortgage company
- Auto finance company
- Credit card companies
- Utility companies
- Student loans
- Personal loans
- IRS
- Medical providers
Your Houston probate lawyer can communicate with the creditors on your behalf. This way, you don’t have to worry about handling dozens of phone calls, emails and letters.
Which Creditors Have Priority?
Some creditors are more important than others. This means they have priority. The general rule is that secured creditors are paid before unsecured creditors. However, there are certain creditors that automatically jump to the front of the line, regardless of who else your loved one owed money to.
Your Houston probate attorney is familiar with the rules regarding creditors. The following creditors take precedence over all others:
- IRS
- Criminal Restitution
- Liens
- Student Loans
These are considered the highest priority creditors. They have to be paid before you pay any other creditors. Now, that doesn’t mean you’ll have to pay them in full. Your probate attorney in Houston will contact them and try to negotiate settlements of their claims.
Why Would a Creditor Settle Their Estate?
When your loved one died, they may owe an awful lot of money to creditors. There may not be enough assets to pay everyone in full. The creditors may be aware of this. They can get the estate’s value from the court or your Houston probate lawyer.
Rather than take the chance of getting nothing, many creditors will be willing to settle their claim for less than what’s owed. They know that, once the priority creditors are paid, there may be no money left.
Your attorney will talk to the creditor and offer them settlements in order to satisfy their claims. Creditors are used to this. They usually have a bottom-line number in mind that they’re willing to take to close their account. Your attorney will start low and negotiate an amount that is fair to both parties.
Once you pay your settlements to the creditors, they’ll send something called a release of debt. This is a paper that states that their claim has been satisfied. You will file these releases with the court. They will become part of your loved one’s estate. Once all of the creditors are satisfied, you can start to distribute the assets.
Contact an Experienced Probate Lawyer in Houston Today
If your parent or other loved one dies, you may need to handle their estate. Rather than do this on your own, it’s a good idea to contact an experienced probate lawyer in Houston at Eddington & Worley. They can handle all of the paperwork for you. They can also negotiate with the creditors to settle their claims against the estate.
Call today and schedule your initial consultation. The probate process can become very confusing. It’s better to have someone who understands the process by your side.