Should an Executor Confirm Available Estate Funds Before Settling a Creditor Claim?
Disclaimer: This article provides general information under South Carolina law. It does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.
Detailed Answer
Under South Carolina law, an executor (personal representative) owes a fiduciary duty to the estate and its beneficiaries. Before you agree to settle or pay any creditor claim, you must confirm that the estate holds sufficient funds to cover that claim along with all other debts, taxes, and administrative expenses. Paying beyond the estate’s available assets can expose you to personal liability.
Key steps to confirm available estate funds:
- Review the estate inventory filed with the probate court. Ensure it lists all assets and assigns accurate fair market values.
- Obtain and review current statements for all bank, investment, and brokerage accounts held in the decedent’s name.
- Open and use a separate estate bank account. Deposit proceeds from asset sales and funnel all estate payments through this account to maintain clear records.
- Liquidate noncash assets when needed. Convert real estate, vehicles, or investments into cash to fund creditor settlements.
- Prepare a periodic accounting. Reconcile all deposits, disbursements, fees, and creditor payments to maintain transparency.
Once you verify that the estate’s cash balance covers the claim and leaves sufficient reserves for other priority obligations, you may negotiate or settle the debt. See SC Code §62-3-807 for payment authority: scstatehouse.gov/code/t62c003.php#62-3-807. For creditor filing deadlines, refer to SC Code §62-3-803: scstatehouse.gov/code/t62c003.php#62-3-803.
Helpful Hints
- File the probate inventory and appraisal promptly to establish an official record of estate assets.
- Keep detailed, dated records of every transaction to support your final accounting to beneficiaries and the probate court.
- Communicate early with beneficiaries about potential distributions to manage expectations.
- Monitor deadlines for creditor claims closely. Missing a filing window can lead to unexpected liabilities.
- Contact the probate court clerk for procedural questions on payments, filings, or required notices.