Detailed Answer
When a decedent’s estate cannot cover valid creditor claims with available cash, the personal representative may petition Hawaii’s circuit court to sell estate property. Under Hawaii law, follow these key steps:
- Open Probate and Appoint a Personal Representative
File a petition under HRS §560:2-201 to admit the will (if any) and appoint a personal representative. The court issues letters testamentary or letters of administration, empowering the representative to act.
HRS §560:2-201. - Provide Notice to Creditors
Publish notice in a local newspaper and mail notice to known creditors within three months of appointment. Creditors must file claims within the time stated in the notice.
HRS §560:3-304. - Inventory and Appraisal
Within 10 months, file an inventory and appraisement of all estate assets under HRS §560:3-303. Identify which assets may be sold to satisfy debts.
HRS §560:3-303. - Petition to Sell Estate Property
File a petition under HRS §560:2-604 requesting court approval to sell real or personal property. Explain why sale is necessary to satisfy creditor claims and describe the asset.
HRS §560:2-604. - Obtain Court Order
The court holds a hearing. If the court finds sale necessary and in the estate’s best interest, it issues an order specifying sale terms, such as minimum bid and sale method (public or private).
HRS §560:2-608. - Conduct the Sale
Advertise and conduct the sale per the court’s order. Record deeds for real estate or properly transfer title for personal property. Ensure the sale yields fair market value. - Distribute Proceeds to Creditors
After costs, pay valid claims in priority order: funeral expenses, administration costs, taxes, secured claims, and unsecured claims. See HRS §560:3-801 for priorities.
HRS §560:3-801. - Finalize Estate Administration
After creditor claims are paid, distribute any remaining funds or property to beneficiaries under the will or Hawaii’s intestacy rules. File a final accounting and petition for discharge of the personal representative.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney in Hawaii to discuss your specific situation.
Helpful Hints
- File notices promptly to avoid missed claims and personal liability.
- Maintain detailed records of appraisals, advertisements, and sale proceeds.
- Consult a probate attorney before selling unique assets like real estate or artwork.
- Ensure the sale process complies strictly with the court order to prevent later challenges.
- Retain proof of creditor payments to include in your final accounting.