Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer: Confirming Estate Funds Before Paying Creditors
In Louisiana, an executor—also known as a succession representative—holds a fiduciary duty to manage estate assets prudently. Louisiana Civil Code article 3222 requires the representative to compile and file an inventory of the decedent’s assets and liabilities within 90 days of appointment La. Civ. Code art. 3222. This inventory establishes a clear snapshot of available funds.
Before settling any creditor claim, the executor must verify liquid resources such as bank accounts, investment holdings, and cash reserves. Louisiana Civil Code article 3261 sets a strict order of payment: administrative costs, funeral expenses, family allowances, taxes, secured claims, and finally unsecured creditors La. Civ. Code art. 3261. Paying a creditor without confirming sufficient funds can lead to personal liability if the estate cannot cover all valid debts.
If the estate lacks adequate cash, the executor should petition the probate court for authority to liquidate nonessential assets or to make partial payments. The court can issue orders that protect the executor from personal exposure while ensuring creditors receive fair treatment. Always maintain detailed financial records and seek court guidance when fund availability is uncertain.
Helpful Hints: Executor Checklist
- Gather bank statements, brokerage records, and appraisal reports before authorizing any payments.
- File the required inventory by the 90-day deadline to document estate assets and liabilities.
- Verify each creditor claim for validity and priority under La. Civ. Code art. 3261.
- If funds fall short, petition the court for instructions or for permission to sell estate property.
- Keep thorough transaction records to defend against later challenges by heirs or creditors.