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When a loved one passes away, many difficult decisions must be made when handling estate assets. In Memphis and the rest of Tennessee, probate is required in most cases. If you are left to handle the business of a deceased loved one or family member, learning the legal steps with probate matters can potentially make the process go smoothly.
If a loved one has passed away or you are estate planning, it’s important to understand the role of creditors for your probate estate. If you or a loved one has debt once passing, keep in mind that creditors have rights or can make claims to your estate.
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Read the guide below to gain more insight into Memphis probate court and probate proceedings and creditor claims.
What is Probate?
When a person dies, they often leave behind property and financial obligations, also known as the probate estate. Probate is the process of transferring the property of a deceased individual, or decedent, to the proper recipients. The probate process makes sure that the decedent’s estate is handled correctly under the law.
The probate process applies to estates where the deceased individual left behind a will and estates where no will was left.
If the decedent left behind a will, the personal representative named in that will is also known as the executor. If the decedent did not leave behind a will, the probate court judge will appoint a personal representative, also known as the administrator.
The person designated as the personal representative handles the following:
- The gathering of all estate assets
- Notifying all parties involved such as heirs, creditors, and beneficiaries
- Distributing any assets
- Paying any debts
When is probate necessary?
Some assets might not have to go through probate. If you are considering estate planning, knowing what constitutes probate can be helpful.
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If the deceased person had assets owned in his or her name alone, it must go through probate. All other assets go through probate court; this is called the “probate estate.”
Here are some items that might be considered non probate assets:
Joint Tenancy
Bank accounts or real estate owned with another person has joint tenants with a Right of Survivorship. Upon death, the other owner or tenant will inherit the asset with no requirements of probate. This only applies to the specific account or property. If both you and the other owner are deceased, probate may be required.
Payable on Death (POD) or Transfer on Death (TOD) Accounts
A Payable On Death account is a bank account that passes to the POD beneficiary upon your death. A Transfer On Death designation can be placed on your brokerage or mutual fund account. Upon your death, the TOD beneficiary will inherit the account. POD or TOD only applies to that specific account.
Beneficiary Designations
Life insurance and retirement accounts do not need to go through probate if you have a person named or designated a beneficiary. Again, this only applies to a specific policy or account.
Revocable Living Trusts
The beneficiary of your trust will inherit all of the assets in the trust if they are placed in a revocable living trust.
There are advantages and disadvantages to avoiding probate. Probate lawyers can help you understand more about probate administration. It is recommended to consult with a law office for legal services pertaining to estate planning and the Memphis probate process.
What is the Memphis Probate Process?
The Memphis probate process is fairly straightforward. The first step is to file the decedent’s will with the Shelby County probate court. If there was a will, the executor will be granted personal representative rights. If there is no will, the court will appoint someone as the personal representative.
In cases where there is no will, a relative, heir, or creditor can file a petition to open the probate estate as “intestate.” In this case, the petitioner qualifies as an administrator of the decedent’s estate and has similar responsibilities as an executor.
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After the personal representative files a petition with the clerk of court to begin the probate process, they will appear before a judge. It is recommended that personal representatives hire a probate attorney to help with this process.
The judge will then grant the personal representative authority to administer the decedent’s estate. The probate attorney will help guide the personal representative through any legal steps.
After the petition is received, the personal representative for the decedent has several duties that must be completed.
- The personal representative must notify all heirs and beneficiaries that the probate proceedings have begun.
- A notice must be published in the newspaper for creditors of the estate. The clerk of court also publishes a notice of death in the newspaper. Creditors will have four months from the date of publication to file any creditor claims against the estate.
- The personal representative must send notices of the opening of the estate to all known creditors.
Within 60 days, the personal representative must complete the following:
- Compile and turn in an inventory of the decedent’s assets. However, this does not have to be completed if the will states otherwise or if the beneficiaries agree it’s not required.
- Notify everyone who stands to inherit under the terms set forth in the will or by state law.
In order for the distribution of assets to heirs and beneficiaries to occur, the following must be complete:
- All debts owed by the estate must be paid
- All state and federal taxes must be paid
The probate court process can take anywhere from four months to a year, depending on the estate assets. Probate lawyers are highly encouraged to help with estate administration.
What is the Role of Creditors in the Probate Process?
Once the probate court process has begun, it’s important to understand the roles and obligations of creditors.
Role of the Clerk of Court
After a person dies, the clerk of court will issue letters of testamentary or administration to the executor or administrator of the estate. After letters have been issued, the clerk will give public notice of death by the following:
- Publishing two (2) consecutive weekly notices in the same county of letters testamentary or administration; OR if there is no newspaper,
- Posting written notices in three places in the county. One of these notices must be posted at the courthouse.
The notice must include directions to any creditors, along with the following information:
- Name of the estate
- Date the letters of testamentary or administration were issued
- The county and name of the court
Role of a Creditor
Once the creditor has learned that the letters of testamentary or administration have been issued, the creditor must file a claim with the clerk of court.
The deadline to file a creditor claim is the following:
- Four (4) months from the date of the first publication or posting of the notice if the creditor received a copy of the notice within sixty (60) days of the date of the first publication or posting;
- Sixty (60) days if the creditor received a copy of the notice to creditors after sixty (60) days of the date of the first publication or posting; or
- One (1) year from the decedent’s date of death if the creditor did not receive a personal notice.
The creditor is advised to file any claims in a timely manner or the “claim will be forever barred.”
Role of Executors or Administrators
There are several duties the executors or administrators must complete for the probate estate.
- Make a fair and legitimate effort to identify any creditor
- deliver a copy of the published or posted death notice to any creditor
- file an affidavit with the clerk of court to show evidence of the publishing or posting of notice
- calculate and prioritize each creditor claim against the estate assets
- review each creditor claim in order to approve or deny them
If your loved one owed money to financial institutions or other individuals, it is highly likely a creditor will arrive once probate begins. Again, a creditor has at least four months to file a claim for the debt. Do not ignore any known debts. A creditor can prosecute a claim against beneficiaries or heirs of an estate.
Who Can Help?
If you are beginning the process of estate planning or recently lost a loved one, a probate attorney can guide you through unknown territory. From knowing the probate cost, accounting fees, and appraisal costs, contacting a law office to help with probate cases is a wise decision.
Attorneys can help with any disputes and help when filing for probate. A probate attorney can also help you understand any non probate assets associated with your estate.
Remember that you will have to pay attorney fees to help with the estate administration.
