Detailed Answer
When someone dies in Louisiana, their debts become part of the succession estate. The personal representative (also called the executor or administrator) must identify, verify and pay legitimate creditor claims before distributing assets to heirs. Louisiana law governs timing, ranking and the process for handling these claims. See Louisiana Code of Civil Procedure (CCP) Chapter 3, Arts. 3251–3255 for details: CCP Chapter 3: Creditor Claims.
1. Identify and Present Claims
Within seven months of the succession opening, creditors must present their claims in writing to the personal representative (La. C.C.P. Art. 3255). The representative posts notice in the newspaper and sends direct notice to known creditors. All creditors with timely claims join a list of debts due.
2. Verify and Approve Claims
The representative reviews each claim for validity. If a claim lacks merit, you may object and ask the court to disallow it (La. C.C.P. Art. 3253). Valid claims move forward to payment.
3. Order of Priority
Louisiana law ranks debts in a strict order. The estate pays in this sequence:
- Succession expenses: Notary fees, court costs, attorney fees;
- Funeral and burial: Reasonable funeral, burial, grave marker costs;
- Family allowance: Daily support for surviving spouse or minor children;
- Judgment creditors: Court-ordered debts;
- Other creditors: Mortgagees, credit cards, medical bills, tax debts.
If the estate lacks sufficient funds to pay all claims, each class of creditor shares pro rata. For example, if funeral expenses exceed available assets after succession costs, creditors split the remaining balance proportionately.
4. Asset Liquidation
If liquid funds fall short, the representative may sell estate property. Sales must follow statutory requirements and may require court approval if contested. Proceeds go to paying creditor claims in ranked order.
5. Closing the Estate
After paying or providing for all claims, the representative prepares a final accounting. The court then issues an order discharging the representative and allowing distribution of any residual estate to heirs.
Disclaimer: This article is for educational purposes and does not constitute legal advice. Consult a qualified Louisiana attorney to address your specific situation.
Helpful Hints
- Compile a master list of all known and potential creditors early.
- Publish creditor notice promptly in accordance with La. C.C.P. Art. 3252.
- Keep copies of all notices, claims and correspondence.
- Object timely to any improper or inflated claims.
- Review estate assets with an accountant or appraiser before sale.
- Consult a Louisiana estate attorney if debts exceed assets or claims are disputed.