A notice to creditors is a public statement signaling the death of a person in order to notify potential creditors of the situation.
What you need to know
Notifying creditors is the official process of telling people owed money by the estate that the deceased has passed.
It is an executor's job to proactively and thorough notify all people who could be owed money by the estate.
Notifying creditors typically involves posting a notice in the local newspaper where the deceased live and emailing or mailing any known creditors.
If a creditor, after being properly notified, does not respond within the deadline outlined in the state's statute of limitations, then the estate could avoid paying that debt.
Filing notice to creditors is the legal act of executor's raising their hand and saying, “Hi, guys. The person who owed you has passed, so file a claim if you want to get paid before we give everything that’s left to taxes, other creditors, and the family.”
This action, or series of actions, rather, starts a statute of limitations that typically lasts 30-120 days. If the person or business doesn't file a claim within that timeframe, then that debt doesn't have to be paid by the estate anymore.
Notifying creditors is still most often performed by:
#1 Posting a newspaper notice in the county where the deceased permanently resided, also known as their domicile. The length of notice changes by state, but it's typically a week or two.
#2 Proactively emailing or mailing all known creditors.
It is the executor's job to demonstrate good faith and effort to tell anyone who was owed money by the deceased that the person has passed. If you executors don't do this, they could open themselves up to liability.
For a step-by-step breakdown on filing notice to creditors correctly, go to: 6 Steps to File Notice to Creditors During Probate (and Not Go Bankrupt)
What to do when a loved one dies
When people die, they leave behind a life that must be closed out. Don't tackle it all alone. From planning the funeral to tackling the legal & financial estate, here's an ultimate checklist of all the things an executor needs to do following the loss of a loved one.
Learn moreJane's mother, Sarah, passed away two weeks ago. Because Sarah owned her house outright, Jane deduced that her mother's estate would have to go through probate. After initiating probate, one of the first things Jane did was start notifying creditors. The thinking was to get the statute of limitations started as soon as possible, that way if creditors dragged their feet maybe Sarah's estate wouldn't have to pay them.
First, Jane found the local newspaper in the county where Sarah lived. She googled the name of the site and submitted a request on the contact form. The fee for a week was $300, which she paid for with the estate's money and not her own. She drafted the notice with the help of a probate attorney. While she didn't have to do this, she wanted to ensure she wasn't leaving herself open to any liability.
After the notice was posted, she ignored some obvious scams by asking them to submit a claim directly to the probate court (which caused them to subsequently ghost her), and then began tallying up all the debts claimed against the estate to make sure the estate had the funds to pay them off.
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