Detailed Answer
When someone dies in Kentucky, the personal representative (executor or administrator) must collect assets, notify creditors, review claims, and distribute the estate under KRS Chapter 394. Follow these steps to manage and prioritize creditor claims effectively:
1. Identify and Notify Creditors
Within 30 days after appointment, publish a notice to creditors in a local newspaper and mail written notice to known creditors. This alert—required by KRS 394.030—invites claims against the estate.
2. Observe the Filing Deadline
Creditors must submit claims within six months of the notice publication or mailing date per KRS 394.030(2). Claims filed late are generally barred unless the court orders otherwise.
3. Review and Allow or Disallow Claims
Examine each claim for validity and priority. You may request documentation such as invoices, contracts, or court judgments. For disallowed claims, send a written notice of disallowance. Creditors may petition the court to challenge your decision.
4. Prioritize and Pay Claims
Kentucky law does not specify distinct classes among unsecured claims, but administrators commonly follow this order:
- Administration costs: Court fees, personal representative’s commission, attorney’s fees, and appraisal costs.
- Funeral and last-illness expenses: Reasonable costs to bury the decedent and medical bills incurred before death.
- Taxes: Federal estate taxes, Kentucky inheritance taxes, and any outstanding income taxes.
- Secured claims: Creditors with collateral enforce security before the estate pays any balance.
- Unsecured claims: All allowed claims without collateral share remaining funds pro rata.
Once claims are paid, distribute any residual assets to heirs or beneficiaries according to the will or Kentucky’s intestacy rules.
Disclaimer: This article is for informational purposes and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Helpful Hints
- Keep detailed records of notices sent, claims received, and payments made.
- Set up an estate bank account to track all estate transactions separately from personal funds.
- Communicate regularly with heirs and creditors to manage expectations and avoid disputes.
- When in doubt, seek counsel from a probate attorney familiar with Kentucky law.
- Adhere strictly to the six-month deadline to prevent valid claims from being barred.