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San Antonio Probate, San Antonio Estate Planning, San Antonio Elder Law


San Antonio Express-News
July 24, 2007

How Does Probate Work (Part 2):
Claims & Distributions

copyright 2007, Paul Premack

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Last week, I started to answer a request from “R.S.” asking for a general overview of the probate process. R.S. has been an executrix three times, and commented that with the help of her lawyer and accountant the process was less difficult and less expensive than she expected.

The probate process begins when the Executor selects a qualified attorney. As discussed last week, the attorney helps select the correct probate proceeding, files an application for probate, appears at the court hearing, and secures a court order admitting the Will to probate. When bond is posted (or waived) and the Executor’s oath is filed, the court clerk issues letters testamentary.

The letters testamentary are the Executor’s credentials, a certificate from the court informing the public that this person asking to access the decedent’s funds and information is legally authorized to have that access. Indeed, gathering information and gaining control of the estate’s assets is the Executor’s first job.

The Executor, with the attorney’s help, must then prepare and file for the court’s approval an “inventory, appraisement and list of claims.” The purpose of the inventory is to allow creditors to see the extent of the estate’s assets, so they can decide whether bringing a claim is worthwhile. It also helps the heirs know what to expect, and is used by the IRS when an estate tax return is required.

The law also requires that a notice be published in a local newspaper announcing the Executor’s appointment. The notice also tells the public that anyone with a claim against said estate must present it in a timely manner.

Some people die without debt, and some owe money on credit cards, auto loans, mortgages, etc. Any secured debtor (like a mortgage company) must be given a written notice from the Executor. If there are unsecured creditors (like credit card issuers) the Executor has a choice of whether to notify them directly or to wait for them to submit a claim. When notice is sent to an unsecured creditor that creditor has 4 months to file an official claim or the debt is barred from collection.

Any claims that are submitted by creditors must be accepted or rejected by the Executor. A claim that is barred by the statute of limitations would be rejected. Any creditor whose claim is rejected by the Executor may file suit in the probate court to have the court rule on the validity of its claim. If the creditor wins, the claim must be classified and paid along with the other valid debts.

If there is clearly enough money in the estate to pay all the claims, they must be paid in full. If the estate does not have adequate funds to pay everyone in full, they are categorized into eight different classes. Class 1 claims are paid first, class 2 next, etc. When several creditors all have the same class (like credit card issuers) they are each paid a proportion of the amounts owed from the estate’s available funds.

Assets that remain after debts and taxes are cleared will then be distributed to the devisees named in the Will. A new law effective in September 2007 requires that all heirs named in the Will receive prompt notice that the Will has been probated. An older law requires that any charities named in the Will also be notified of the probate.

Hopefully the Executor can distribute assets promptly, but sometimes the process of paying claims and clearing taxes can take months. When estate taxes are an issue, the tax return is not even due for nine months and the accountant or attorney may not settle the tax issues for several additional months. In most non-taxable estates the heirs receive their inheritances promptly and the Executor’s job is done.
Prior Column: How Does Probate Work? (Part 1)
Next Column:
Limits on Probate and Executor
Disclaimer: This column answers a specific legal question asked by an individual in Texas. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice, as it may not meet your individual needs. It may give you a solid basis for discussion with your own attorney.  You should consult with your personal attorney before you take any action on this or any legal issue. Also, please be aware that laws change, so  this column is valid only as of the date it was published. This communication does not create an attorney-client relationship between the author and the reader.

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