There are so many details that families must address when someone dies in Minnesota. Planning a funeral often takes priority over everything else at first, but then people also need to locate a will and begin the probate process. Regardless of whether or not someone died with testamentary documents in place, there are certain rules that govern the distribution of their resources.
Before family members and other beneficiaries can inherit anything from the estate, the deceased’s assets will first need to go through probate. The probate process also often involves addressing someone’s debts.
Debts diminish an estate’s value
Creditors have the right to make a claim in probate court for full repayment of any amount owed by the decedent. In fact, the state itself may make a sizable claim against the estate if the deceased individual received Medicaid benefits prior to their death. Those debts, as well as any taxes owed by the individual or the estate itself, take priority over the inheritance rights of any individual.
The personal representative of the estate may need to liquidate assets to pay off creditors, but only after they send written notice to individual creditors and publish notice of the probate proceedings in the local paper to inform unknown creditors. It is only after the window for making a claim has closed that the representative of the estate can safely distribute resources to beneficiaries. Premature asset distribution might lead to personal financial liability for the representative of the estate. In some cases, the vast majority of an individual’s property, possibly including their primary residence, could be subject to liquidation to repay creditors.
Not all property passes through probate court
Sometimes, people plan carefully to keep certain assets out of probate. Trusts, transfer-on-death designations and other advance plans can all protect certain assets from creditor claims. The representatives handling estates can minimize their personal risk by getting the right support so that they comply with all state rules regarding advanced notice for creditors and the prioritization of specific financial obligations over others.
Seeking legal guidance to learn more about how debts affect probate administration can benefit those who are either expecting to assist with the probate process or who are anticipating receiving assets from an estate.