Disclaimer: This article provides general information on South Dakota probate procedures. It is not legal advice.
Detailed Answer
An executor (personal representative) in South Dakota must confirm the estate’s available funds before paying a creditor’s claim. South Dakota law requires a thorough inventory of assets, proper claims notice, and prioritized payment. Confirming funds helps the executor avoid personal liability and ensures fair treatment of all creditors.
1. Inventory and Valuation: Under SDCL 29A-3-701, the executor must file a complete inventory of estate assets with the court. This inventory establishes the estate’s liquid and non-liquid assets—cash, bank accounts, real estate, and personal property.
2. Creditor Notice and Claim Allowance: The personal representative must publish notice to creditors and mail individual notices under SDCL 29A-3-801. Creditors then have a fixed window (usually three months) to present claims. Under SDCL 29A-3-717, the executor reviews and allows or rejects each claim in writing.
3. Payment from Estate Assets: Once claims are allowed, the executor must pay them “as soon as practicable” from available estate funds per SDCL 29A-3-715. If liquid assets are insufficient, the estate may need to sell property or seek court approval for a payment plan. The executor should not pay unsecured claims if funds are insufficient to cover higher-priority obligations, such as administration costs, funeral expenses, and secured debts.
4. Priority and Insolvency: South Dakota’s Uniform Probate Code ranks debts: administrative expenses first, secured creditors next, then unsecured claims. If the estate lacks sufficient assets to satisfy all claims, the executor must distribute funds in this order to comply with SDCL 29A-3-715 and avoid personal liability for mispayment.
Helpful Hints
- Review SDCL 29A-3-701 for detailed inventory requirements.
- Publish and mail creditor notices promptly under SDCL 29A-3-801.
- Document allowance or rejection of each claim under SDCL 29A-3-717.
- Prioritize administrative expenses and secured claims before unsecured ones.
- Seek court guidance or approval before selling estate property or if funds are insufficient.
- Maintain clear records of all receipts, disbursements, and court filings.