An estate plan refers to a document that dictates how your estate will be managed and distributed when you die. Your estate could consist of your personal items, bank accounts, real estate, stocks and securities, and other assets. In addition to determining the distribution of your estate, an estate plan could also include:
- How you wish to receive medical treatment should you become incapicitated and cannot speak for yourself;
- If you are an organ donor;
- Who will make legal and financial decisions on your behalf should you become incapicitated;
- Who will care for your minor children;
- Who will take over your business interests; and
- Any funeral arrangements you have already made.
An estate attorney can assist you in drafting your will, trust, power of attorney, or other necessary legal documents to ensure the protection and distribution of your estate. Although all estate plans will be different due to the needs of the estate owner, some of the general elements of a successful estate plan include:
- Your family understanding your wishes, in order to minimize legal disputes;
- Language that clearly states your wishes, to clarify any other vague documents;
- A will that transfers your property to your named beneficiaries, as well as appoints a legal guardian to care for your minor children;
- A healthcare directive that clarifies end of life treatment and other important medical decisions; and
- A financial power of attorney to make important legal and financial decisions in the event you become incapacitated.
What Is an Estate Executor?
Part of estate planning includes appointing a person who manages the estate and ensures that all property is distributed according to your wishes. This person is known as the executor of the estate and has several duties in order to fulfill their role:
- Notify financial institutions as well as governmental institutions of the person’s death;
- Using the funds from the estate to pay any ongoing or outstanding expenses;
- Pay off debts and taxes;
- Create a bank account for money owed to the decedent, such as paychecks and stock dividends;
- Make arrangements for any necessary probate proceedings;
- Determining who inherits what property;
- Distributing property whenever possible;
- Finding and managing the decedent’s assets during the probate process; and/or
- Supervising the distribution of property and other assets to the beneficiaries noted in the will.
What Sort of Claims May Be Brought Against My Estate? How Will These Claims Be Brought?
Should any claims be brought against an estate, the estate’s personal representative will handle them. A personal representative could be the estate’s executor, a trustee, a beneficiary, or another appointed representative. There are a number of different claims or demands for payment may be brought against an estate. If the estate has the available assets to pay for these claims, they are generally paid in the following order:
- Costs and expenses of administration;
- Reasonable funeral expenses;
- Debts and taxes with preference being given to those required by federal law;
- Reasonable and necessary medical and/or hospital expenses, or payments to the people who assisted the decedent;
- Debts and taxes as required by individual state laws; and
- All other claims that may be brought against the estate.
Should the estate’s money be depleted before a specific claim is paid out, the claimant will receive nothing. Additionally, any claims that may arise at or after the death of the estate owner will not be honored.
The claimant, or the person who is seeking an interest in the estate, will generally mail their claim to the estate’s representative. The claimant will also need to file their claim in court. The following should be included in their claim:
- What their claim is for specifically;
- Who the claimant is; and/or
- When the claim is due, if that due date has not already expired.
The claimant may take court action against the estate’s personal representative for debt collection. From there, the personal representative must be informed of the claim within a specific time period or else the claimant will be unable to collect. These time periods vary with each state’s estate law. In some cases, the court may order an extension in order to allow the claimant more time to collect.
An estate’s personal representative can respond to a claimant, with a written notice of disallowance of the claim. Claimants typically have sixty days within receiving the claim in order to respond. Next, the claimant may then petition the court to order payment of the claim.
Do I Need an Attorney for Creditor Claims On an Estate?
As previously mentioned, an estate attorney can assist you in drafting your will, trust, power of attorney, or other necessary documents to ensure the protection and distribution of your estate. If you are the personal representative of an estate, or if you would like to ensure that any claims brought against your estate will be properly settled, you should also consult with a skilled and knowledgeable estate attorney.