DEALING WITH DEBT AND CREDITORS IN PROBATE
Probate in Missouri can be complicated. When dealing with debt and creditors in probate, the entire process can become extremely complicated. As a probate attorney St. Peters, Missouri, I know that handling creditors correctly can leave beneficiaries and heirs with more of an inheritance in their pockets.
This article will offer some advice in dealing with probate creditors immediately after the death of a family member.
Who Is Responsible For Debt When A Person Dies?
With very few exceptions, in Missouri the estate of a person is responsible for the debts, but not the individual family members or beneficiaries. By estate, I mean that a creditor can only reach the assets of a deceased debtor through the probate process in a court of law. If no estate is opened (maybe because of very good estate planning), then creditors cannot reach any of the deceased’s assets.
What Are The Exceptions?
First, when the deceased has a debt that is owed by more than one person, then that other person remains liable for the debt. The classic example would be a mortgage owed by a husband and wife. If wife dies, husband still owes the balance of the mortgage.
Second, in most cases, when a person personally guarantees a debt of the deceased. Example: Sam buys a car and because of his credit, Sally has to personally guarantee the loan to the car company. Sam then dies. Sally is most likely responsible to pay the debt of Sam because she personally guaranteed Sam’s loan and when he died, she must pay the loan.
What Steps Can Creditors Take Outside Of The Probate Process?
Creditors will often not know that a person has passed away until they are informed by a family member. Creditors with secured assets (like a mortgage holder for a home or a note holder for a vehicle) can take back the home or vehicle of a deceased if the mortgage / note is not paid.
In other words, if Sam creates a beneficiary deed attorney near me and leaves his home to Sally when he passes away, Sally would have an equitable interest in the home subject to assuming the mortgage that Sam had or, just as often, re-financing the mortgage. The bottomline in this example is that Sally doesn’t inherit more than the equity that Sam had in the property when he died.
Can A Creditor Force An Estate To Be Opened?
Yes, but in limited circumstances. A creditor can file a Missouri Application of Creditor For Refusal of Letters if the value of the estate is under $15,000.00 and the deceased did not have a surviving spouse or unmarried minor children.
How Long Does A Creditor Have To Collect A Debt From The Deceased?
If a probate has been opened, the creditor has six (6) months from the date of publication of notice. If no probate has been opened, any creditor debt is no longer valid after one (1) year from the date of death.
Should I Pay Utility and Credit Card Balances Of The Deceased?
I ordinarily advise that these types of bills not be paid unless they are needed. An example would be paying the water bill for a home if the home needs to be sold, or the heating bill if it’s winter and the house is vacant. As for credit card debts, if there will be an estate, I sometimes recommend a credit card bill be negotiated to a lower amount. However, if an estate is opened, often a creditor card company will make claims but those claims can be successfully defeated in some cases.
Missouri Probate Administration FAQS
Probate can seem daunting, but working with a knowledgeable team can make the process more manageable. Our Missouri probate administration lawyer is here to answer questions about probate administration and to provide guidance through the process. You can trust us to help you protect your rights and interests throughout the process of probate. Our firm has been recognized for our exceptional client-focused service in our 12 years of serving the Missouri community, and we will provide the personalized and dedicated service that you need during probate.
Do I Need A Lawyer For Probate In Missouri?
Probate is a legal process that involves distributing a deceased person’s assets according to their will or state law. While it’s possible to handle probate independently, a probate administration lawyer can help guide families through the specific steps and requirements in Missouri. Probate law varies by state, and having a professional who understands Missouri probate requirements can reduce delays and help manage potential issues.
What Are The Probate Fees In Missouri?
Probate fees in Missouri can include court costs, attorney fees, and other expenses, which vary depending on the estate’s size and complexity. Missouri probate law allows attorneys to charge a percentage of the estate’s value as a fee, and this rate can vary. Additionally, there may be costs for appraisals, filing fees, and executor expenses. Our Missouri probate administration lawyer can provide an outline of likely costs based on the specifics of the estate, giving families a clear picture of expected fees early in the process, as well as help you manage the probate process in as efficient a manner as possible in order to minimize time and cost.
What Happens If I Do Not File For Probate In Missouri?
If probate is not filed when required, the deceased person’s assets cannot be legally transferred to heirs or beneficiaries. In Missouri, the court oversees the distribution of assets, and failing to file for probate can cause delays, complications, and even legal action by creditors or interested parties. Additionally, Missouri law sets time limits for filing probate, so it’s important to start the process promptly.
What Assets Do Not Pass Through Probate In Missouri?
Some assets are excluded from probate in Missouri, including those with named beneficiaries or jointly owned property. Life insurance policies, retirement accounts, and certain types of bank accounts often have designated beneficiaries, allowing them to bypass probate. Similarly, assets held jointly, such as property titled with rights of survivorship, typically transfer directly to the surviving owner without going through probate. Knowing which assets avoid probate can help reduce the overall burden on loved ones and may even simplify the probate process. Our Missouri estate planning attorney can help you take inventory of your assets and help you determine what does and does not pass through probate.
How Can I Avoid Probate In Missouri?
There are several ways to avoid probate in Missouri, such as creating a living trust, designating beneficiaries on accounts, and jointly titling property. Establishing a trust can be an effective strategy, as it allows assets to pass directly to beneficiaries outside of probate. Additionally, setting up payable-on-death or transfer-on-death designations on certain accounts can also help bypass probate. Our legal team can help you explore these options to see what might work best for your situation.
Contact Our Missouri Probate Administration Lawyer Today
Probate can feel like a complicated process, but having support can make all the difference. Working with our experienced and dedicated probate administration lawyer can help simplify each step, allowing families to focus on what matters most. If you have more questions or want to get started, contact Legacy Law Center today to schedule a consultation. We’re here to make probate administration as smooth as possible for you and your loved ones.
