One of the most important tasks in administering an Estate is making sure that the creditors of the deceased person are paid. If the decedent owned real estate, making sure that the Notice to Creditors has been published and that the valid claims of the creditors have been paid is an important step in making sure that clear title to the real property passes to the heirs.
Publishing the Notice to Creditors
Once you’ve been appointed as an Executor or Administrator of an Estate in North Carolina, you’ll need to arrange for a Notice to Creditors to be published in a local newspaper once a week for four weeks. In Wake County, we generally run the Creditor’s Notice in either the Wake Weekly or the News & Observer. This classified legal ad notifies creditors of their deadline to submit their claims against the Estate, which is generally three months after the first publication of the ad.
Personally Notifying Known Creditors
The Executor should review the decedent’s mail and bank records to determine any potential creditors, and he or she should send a copy of the Notice to Creditors to the potential creditors. If the deceased person was receiving Medicaid in a nursing home or through various home care programs, the North Carolina Department of Health and Human Services must also be notified, and it is likely they will submit a claim for reimbursement for the amount Medicaid paid for the decedent’s care. You may want to consult an Elder Law attorney for help if you receive a Medicaid estate recovery claim.
Paying the Claims of Creditors
After the deadline for creditors to submit claims against the estate has passed, the Executor may begin paying the creditors. If the estate is insolvent, which means the value of the estate is insufficient to pay all of the claims, then the North Carolina statutes set out the order in which the creditors’ claims should be paid. If you are administering an insolvent estate, you should seek help from an Estate Attorney before paying any creditors to make sure you are paying the correct creditors in the proper amounts. The Executor has the right to deny claims that the Executor determines are not valid; an attorney can help you follow the appropriate procedure in denying claims.
Amanda Spence has been practicing Estate Planning, Probate, and Estate Administration in Raleigh, North Carolina for thirty years. She helps clients with estate administration and probate in Wake, Johnston, Harnett and other counties throughout North Carolina. To schedule a consultation with Ms. Spence call (919) 863-4183 or email her at [email protected].