How to Manage and Prioritize Creditor Claims During Estate Administration in Arkansas

Detailed Answer

Administering an estate in Arkansas requires the personal representative to identify, notify, evaluate and pay creditor claims in a specific order. Following Arkansas Code and clear procedures helps avoid personal liability and ensures fair treatment of all creditors.

1. Identifying and Notifying Creditors

The personal representative locates known creditors by reviewing the decedent’s bills, statements and contracts. Under Arkansas Code §28-41-102, you must publish notice to unknown creditors once a week for two consecutive weeks in a local newspaper: https://www.arkleg.state.ar.us/ArkansasCode/Section?title=28&section=28-41-102. Actual notice triggers shorter deadlines for those who receive it directly.

2. Filing Deadlines and Presentation of Claims

Arkansas Code §28-41-101 requires creditors to present claims within one year after the decedent’s death: https://www.arkleg.state.ar.us/ArkansasCode/Section?title=28&section=28-41-101. If published notice is given, creditors must present claims within three months of the first publication date. Late claims may be barred.

3. Reviewing and Allowing Claims

After claim filing, the personal representative reviews each claim for validity and amount. Under §28-41-104, you may allow or reject a claim in whole or in part. Maintain written records and send notice of disallowance if you reject any portion of a claim.

4. Prioritizing Payments

Arkansas law sets the order of payment:

• Funeral expenses and last illness: Reasonable costs before other debts.
• Family allowance: Up to $18,000 for surviving spouse and minor children under §28-41-107: https://www.arkleg.state.ar.us/ArkansasCode/Section?title=28&section=28-41-107.
• Administration expenses: Fees for personal representative, attorneys and accountants.
• Taxes: Decedent’s final income tax and estate taxes.
• Secured creditors: Mortgage or lien holders paid from collateral value.
• Unsecured creditors: General debts, prorated if assets are insufficient.

Follow each step carefully. Keep detailed ledgers and bank statements. If assets fall short, Arkansas courts may authorize partial distributions and seek court approval for claim reductions.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney to address your specific situation.

Helpful Hints

• Immediately inventory all bills, contracts and bank statements.
• Publish legal notice promptly to fix deadlines for unknown creditors.
• Keep a clear, dated log of all claim presentations.
• Consult with an estate attorney before rejecting large claims.
• Ensure distributions follow Arkansas priority rules to avoid personal liability.