Estate and Probate Attorney in Cincinnati Ohio » creditors

Insolvent Estate proceeding

admin — Tue, 29 Mar 2011 08:59:50 +0000

Some people’s estates are insolvent when they die. This means that the estate owes more in bills and debts than there are assets of the estate. If a person dies with $20,000 in the bank, but owes $50,000 in medical bills, the estate is insolvent. The frequent question that is asked by the family is, “Do we have to pay those bills?” The answer is “No”. The Ohio Probate law has a proceeding called the administration of an insolvent estate. The assets are liquidated or collected by the executor or administrator of the estate and then distributed in a specified order. These rules are very similar to a bankruptcy. The first level creditors get paid in full, then the second level creditors until the estate is out of money. The creditors who do not get paid are out of luck. They cannot pursue the heirs, beneficiaries, or the executor/administrator for the money.

The claims of the estate are paid in the following order:

(1) Costs and expenses of administration including the filing fees and attorney’s fees for handling the estate;

(2) An amount, not exceeding four thousand dollars for funeral expenses and three thousand dollars for burial and cemetery expenses. The Court may also approve additional expenses to be included in this section.

For purposes of this division, burial and cemetery expenses shall be limited to the following:

(a) The purchase of a right of interment;

(b) Monuments or other markers;

(d) The cost of opening and closing the place of interment;

(e) The urn.

(3) The allowance for support ($40,000) made to the surviving spouse, minor children, or both;

(4) Debts entitled to a preference under the laws of the United States;

(5) Expenses of the last sickness of the decedent;

(6) If the total bill of a funeral director for funeral expenses exceeds four thousand dollars, then, an additional two thousand dollars can be paid next;

(7) Personal property taxes, claims made under the Medicaid estate recovery program, and obligations for which the decedent was personally liable to the state or any of its subdivisions;

(8) Debts for manual labor performed for the decedent within twelve months preceding the decedent’s death, not exceeding three hundred dollars to any one person;

(9) Other debts for which claims have been presented and finally allowed.

The assets of the estate pay in order. Thus, all of the bills listed in number one above get paid first and in full before any in number two get paid. If there is money left over by the time you get to number nine, the money is allocated pro rata. Thus, these general creditors may receive 90 cents on a dollar, 22 cents on a dollar, or nothing for their claim. Once paid the balance is discharged.

What is the Timetable for an Administration?

admin — Tue, 29 Mar 2011 08:29:56 +0000

Typically, the estate administration process takes approximately six months to one year. More complicated estates may take longer. The timetable for various tasks is as follows:

One month – file the will and have the fiduciary appointed (i.e., the fiduciary is called an executor if there is a will, or an administrator if there is no will)
Three months – will contest period ends and the inventory is filed
Six months – creditors must make claims or else their claims are barred
Nine months – estate tax returns are due
Six months to one year (or more) – make final distributions to the heirs and file the final account

For a detailed list of due dates and a typical timetable, see:

http://www.probatect.org/services/instructions/pdf/fullAdministrationInstruct.pdf

What Are the Steps of Probate?

admin — Tue, 29 Mar 2011 08:29:06 +0000

The steps of going through probate include the following:

File the will with the probate court
Send notice of the filing of the will to all persons listed in the will and those who would inherit if there was no will or the will was invalid
Have the executor (or administrator when there no will) appointed. Once appointed, the Probate Court issues a court order called “Letters of Authority”
Appraise and value the assets
File an inventory listing the assets in the probate estate
Send notice of the filing of the inventory to the heirs
Have a hearing if any beneficiaries object to the inventory
Sell assets as needed to pay debts
Resolve will contests, if any
Resolve creditor claims, if any
File estate tax returns
Transfer and distribute assets to the heirs
File a final account showing all distributions from the estate