Detailed Answer
When you administer an estate in Delaware, you must identify, notify, and satisfy creditor claims before distributing assets to heirs or beneficiaries. Follow these steps to manage claims efficiently:
1. Identify and Notify Creditors
The personal representative (PR) reviews the decedent’s records to identify known creditors. Delaware law also requires the PR to publish a notice to creditors in a local newspaper. See 12 Del. C. § 1301. Known creditors receive direct notice by mail.
2. Deadline for Filing Claims
Creditors generally have six months from the date of issuance of Letters Testamentary or Letters of Administration to present claims. After that period, the estate may reject late claims. See 12 Del. C. § 1302.
3. Classify and Prioritize Claims
Delaware does not list every debt type by statute, but standard practice breaks claims into these categories:
- Secured Claims: Debts backed by collateral (e.g., mortgages).
- Administrative Expenses: Fees for estate administration, including attorney and court costs.
- Funeral and Last Illness Expenses: Costs for funeral arrangements and medical bills.
- Taxes: Federal and state death taxes and unpaid income taxes.
- General Unsecured Claims: Credit cards, personal loans, and medical debts not classified above.
Typically, secured creditors claim collateral value first. Administrative expenses and funeral/medical bills follow. Taxes come next. Finally, general unsecured creditors share remaining assets on a pro-rata basis.
4. Paying and Resolving Disputes
Review each claim for validity. Pay undisputed claims in order of priority. If a creditor’s claim is excessive or invalid, the PR may reject it and seek court approval to settle disputes through a probate proceeding.
Disclaimer
This article is for educational purposes only. It does not constitute legal advice. Consult a qualified attorney to review your specific situation.
Helpful Hints
- Keep a detailed log of all notices sent and claims received.
- Consult the Delaware Code for updates: delcode.delaware.gov.
- Work with a probate attorney if claims exceed the estate’s liquid assets.
- Promptly file required court forms to avoid delays.
- Maintain clear communication with beneficiaries about creditor claims.