Episode 82: How Creditors Can Delay a Probate Estate
Episode 82
Host: Jill Mastroianni
How Creditors Can Delay a Probate Estate
Can you open a probate estate, distribute the assets, close the file, and move on without worrying about creditors?
Not quite.
In this episode of The Death Readiness Podcast, Jill answers a listener's question about why probate sometimes feels painfully slow. Using Tennessee law as an example, she explains how the creditor claims process works, why executors can't simply skip legal formalities, and what can happen if beneficiaries receive their inheritances before all of the creditor deadlines have expired.
What You’ll Learn in This Episode
· Why probate courts don't allow executors to rush through estate administration
· What it actually means to "open" a probate estate
· Why probate courts publish Notices to Creditors
· What "reasonably ascertainable" creditors are and why they matter
· How creditor notice deadlines work
· Why certified mail can play an important role in probate administration
· What happens if beneficiaries receive distributions before all creditor deadlines expire
· Why beneficiaries may be required to return inherited funds to satisfy valid creditor claims
· What it means for a creditor to formally "file a claim" against an estate
· Why a creditor can't simply call the executor and ask to be paid
· What documentation creditors must provide when filing a claim
· Why filing a claim doesn't automatically mean the creditor gets paid
· How executors decide whether to accept or object to a creditor's claim
· Why sometimes it makes financial sense to pay a small disputed claim rather than litigate it
· The importance of following legal formalities, even when they seem inefficient or unnecessary
Resources & Links
Watch this episode on YouTube: https://youtu.be/CikfGGHRNmQ
Ask a question for Tuesday Triage: https://www.deathreadiness.com/tuesdaytriage
Connect with Jill:
· Website: DeathReadiness.com
· Email: jill@deathreadiness.com
· Learn more about Jill’s solutions
· Subscribe to the Death Readiness Dispatch!
· Ask a question for Tuesday Triage
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Imagine you've done everything right. You opened the probate estate, paid the bills you knew about, distributed the inheritances, and closed the file.
Then, months later, a creditor shows up.
Can beneficiaries actually be forced to give money back?
Today, I'm breaking down how the creditor claims process works, why probate courts won't let executors rush to the finish line, and what every family should understand before writing inheritance checks.
Welcome to The Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni — estate planning attorney, death readiness guide, and your translator for wills, trusts, probate, and the conversations most families avoid. If you’ve been wondering things like, ‘Can a trust protect what I leave to my children?’ ‘What happens if I give someone power of attorney over me?’ and ‘How can I help my parents while respecting their independence?’ You’re in the right place.
We currently have a foster puppy named Michael. Well, Michael Jackson. Each litter from Detroit Dog Rescue gets a naming theme, and this one was the Jackson siblings. In fact, Michael was a last-minute switch. We were originally supposed to get Janet.
Michael is our fourth foster puppy this year. One of the hardest parts of fostering is not knowing how the story ends. When will Michael find the perfect family?
When someone is interested in adopting him, Detroit Dog Rescue emails me to schedule a "Meet and Greet." Then the waiting begins.
I think about what questions the potential adopter might ask. I wonder whether I've included too much information, or not enough, in Michael's profile. I pack up a few days’ worth of food and his favorite toys.
Then I show up. Maybe no one adopts him and I drive home with Michael. Maybe I don't. But no matter how much I want to skip ahead to the happy ending, I can't. The process has to play out first.
Today's Tuesday Triage question reminds me of that. When someone’s estate is being distributed, everyone wants to skip ahead to the ending, too. They want to distribute the money, close the estate, and move on with their lives. But just because you're ready for the process to be over doesn't mean the process is actually over.
Today's question comes from a listener in Tennessee who asked:
“Why can't we just open an estate, distribute everything right away, close it, and not worry about creditors if they didn't come forward while the estate was open?”
I hear some frustration in that question, and I hear that same frustration from clients all the time.
The short answer is that Tennessee law doesn’t let a creditor’s rights disappear simply because the executor is in a hurry.
But the longer answer is actually much more interesting.
Most people don't want probate to drag on. They want to finish it, check the box, and move on with their lives. And I don’t blame them.
Probate is a constant reminder that someone you loved died. Every email from the attorney, every court filing, every document that needs to be signed is another reminder of the loss.
There are legal bills, court deadlines, paperwork, and endless phone calls with financial institutions. Beneficiaries want to know when they'll receive their inheritance. Sometimes those questions are completely reasonable. And sometimes they're not especially gentle. Either way, the executor often feels pressure from every direction.
And when emotions are running high, it's not unusual for beneficiaries to become frustrated with the executor or the attorney. They are the people closest to the process, so they become the easiest target for frustrations that may have very little to do with them.
I've also seen situations where beneficiaries begin to wonder whether things are taking longer than necessary. Maybe communication hasn't been great, or maybe they don't understand what's happening behind the scenes. And when you're grieving, waiting, and not entirely sure what's going on, your mind can start filling in the blanks.
So when someone asks, “Why can't we just distribute everything and close the estate?” what they're really asking is, “Why does this have to take so long?”
The answer is that the law is trying to balance two competing interests.
On one hand, we want estates to be settled efficiently.
On the other hand, we don't want legitimate creditors losing their rights simply because they didn't know someone had died.
The creditor claims process exists to balance those two goals.
I'm going to talk about Tennessee law specifically, but don't get too hung up on the state. While the deadlines vary from state to state, the basic concept is similar almost everywhere.
Before we talk about creditors, let's make sure we have a basic understanding of what probate is.
Probate is the court-supervised process of gathering a deceased person’s assets, paying their debts, and distributing what's left to the people who inherit.
One of the first things that happens in a probate estate is that creditors are given an opportunity to come forward and make claims.
But before we get to that, let's talk about what it actually means to “open” a probate estate.
From the attorney's perspective, it starts with paperwork. The most important document is a petition asking the court to open the estate and appoint an executor. In that petition, I explain that the person died, whether they had a will, and who should be appointed to serve as executor.
I also prepare a proposed order for the judge to sign.
This was something that surprised me before I became an attorney. The attorneys actually draft the order they're asking the judge to enter. The judge reviews it, makes changes if necessary, and then signs it.
Once the judge signs the order, the clerk issues a document called Letters Testamentary or Letters of Administration.
These letters are like the executor's permission slip.
It’s the document that tells banks, financial institutions, and other third parties that the executor has legal authority to act on behalf of the estate.
Only after the estate is officially opened and the executor has been appointed does the creditor notice process begin.
Now, how formal is this estate-opening process?
Well, that depends on where you are.
In Rutherford County, Tennessee, where I recently opened an estate, the executor and I were required to appear in person before the judge. In Davidson County, Tennessee, where I most recently opened a probate estate, I didn't even have to appear via Zoom. Because all of the beneficiaries were in agreement and had signed the necessary paperwork, the judge simply reviewed the filings and signed the order.
Either way, once the judge signs the order and the executor receives authority to act, the next step is notifying creditors.
Within thirty days after the executor is appointed, the probate court clerk must publish a Notice to Creditors for two consecutive weeks in a newspaper serving the county where the estate was opened. If the county doesn’t have a newspaper, the notice must be posted in 3 public places in the county.
Tennessee law actually provides the form of the notice.
In plain English, it's a public announcement that says: "If you believe this person owed you money, now is the time to speak up."
After the notice is published, the newspaper sends proof of publication to the clerk. The clerk then forwards that proof of publication to the executor.
And that's when the executor gets to work.
The executor is required to provide notice to all known creditors and all creditors who are quote “reasonably ascertainable.”
So what does that mean?
Known creditors are exactly what they sound like—creditors the executor already knows about.
Reasonably ascertainable creditors are creditors the executor could identify with a reasonable amount of effort.
In practice, that often means reviewing the decedent's mail, bank statements, credit card statements, and other financial records.
Maybe there's a hospital bill from the decedent's final illness, an ambulance bill, a Comcast bill, or a credit card statement.
The executor doesn't get to stick their head in the sand and say, "Well, I didn't know about that creditor."
If the information was sitting in a stack of unopened mail on the kitchen counter, that creditor was reasonably ascertainable and should receive notice.
When I send notices to creditors, I take the process very seriously.
I prepare a cover letter, attach the proof of publication, and send everything by certified mail. Then I keep copies of the letter, the certified mail receipt, and the proof of delivery in my file.
So why do I go to all that trouble?
Because deadlines matter.
And whether a creditor received notice can determine how much time that creditor has to file a claim against the estate.
Here's the basic rule: if a creditor receives notice at least 60 days before the four-month claims deadline, then the creditor has to file by that four-month deadline. Let's look at an example because it's much easier to understand with actual dates.
Assume the first notice to creditors is published on May 19th.
Four months later is September 19th.
If a creditor receives actual notice from the executor at least sixty days before September 19th, then that creditor must file a claim by September 19th.
In our example, sixty days before September 19th is July 21st.
So if the creditor receives notice on or before July 21st, the deadline remains September 19th.
But what if the creditor doesn't receive notice until after July 21st?
Then the four-month deadline no longer applies to that creditor.
Instead, that creditor gets sixty days from the date they actually received the notice.
So if I send a notice late, I may end up extending the deadline for that particular creditor.
And what if a reasonably ascertainable creditor never receives notice at all?
In that case, the creditor has one year from the decedent's date of death to file a claim against the estate.
That's a big reason why executors and their attorneys spend so much time identifying creditors and documenting that notice was sent. A properly delivered notice shortens the creditor's filing window and helps move the estate toward closing.
But at this point, some of you may be wondering:
"If a creditor who doesn't receive notice has up to one year from the decedent's date of death to file a claim, does that mean the estate has to stay open for an entire year?"
No, it doesn’t.
The executor can ask the court for permission to make distributions to the beneficiaries before that one-year period expires.
But that doesn't eliminate the risk. Let's say the court allows the executor to distribute the estate six months after death. The beneficiaries receive their inheritances and everybody moves on with their lives.
Then, ten months after the decedent's death, a creditor who never received notice comes forward with a valid claim.
What happens?
The beneficiaries have to give some of that money back.
In other words, distributing the estate before the one-year period expires doesn't make the creditor's rights disappear. It simply shifts the risk of payment from the estate to the beneficiaries.
And what happens after that one-year period passes?
At that point, the creditor is out of luck.
In fact, if a claim is submitted more than one year after the decedent's date of death, the probate court clerk won't even file it.
Now, I've been talking about creditors "filing claims" against an estate.
But what does that actually mean?
You might imagine a creditor calling the executor and saying, "Hey, your uncle owed me money."
But that's not how it works.
To make a claim against a probate estate, a creditor has to formally file paperwork with the probate court.
And the creditor can't just say, "Trust me, they owed me money."
The creditor has to provide documentation showing both that the debt exists and that the estate is responsible for paying it.
The creditor must also sign an affidavit under oath stating that the claim is valid, that the debt has not already been paid, and that the creditor isn't holding any undisclosed collateral or security for the debt.
Once the claim is submitted, the clerk files it with the probate court.
But here's an important point:
The clerk is not deciding whether the claim is valid.
Filing a claim doesn't mean the creditor wins.
It simply means the creditor has gotten in the door.
So when we talk about creditors "filing claims," we're not talking about a phone call, an email, or a strongly worded letter.
We're talking about a formal court filing supported by documentation and a sworn statement, all submitted within very specific deadlines.
So what happens next?
The executor reviews the claim and decides whether to accept it or object to it.
If the executor—or any other interested party—believes the claim is invalid, they can file what's called an exception to the claim.
If nobody objects within 30 days, the claim is deemed valid and enforceable against the estate.
Now let's assume a claim is filed and everyone agrees it's legitimate.
Let's say the hospital where the decedent died files a claim for $4,000, and the executor is completely satisfied that the bill is valid.
Should the executor immediately write a check and pay it?
No.
The executor should first determine what other claims might exist against the estate.
There may not be enough money to pay every creditor in full. If that's the case, Tennessee law has rules about which claims get paid first.
So even though paying a bill immediately might feel like the responsible thing to do, it's better to wait until the claims period has run and you have a clearer picture of the estate's obligations.
The same principle applies if you're sorting through the decedent's mail and find a hospital bill that you know is legitimate.
Should you just pay it and save everyone the trouble of going through the notice-to-creditors process?
Again, no.
One of the most important lessons in probate administration is this:
When you're working within the legal system, follow the formalities.
You don't get to skip the creditor claims process just because everyone agrees a bill is valid.
Can you call the hospital's billing department and tell them that your uncle died?
Sure.
But that isn't legal notice.
Can you pay a hospital bill you know is legitimate before the creditor claims period has run?
You could.
But that doesn't mean it's the right thing to do.
Probate administration is full of situations where the legally correct answer and the common-sense answer don't always feel the same.
That's why probate administration is often more about patience than speed.
Now let's look at the opposite situation.
What if a creditor files a claim for $100 and you're absolutely convinced the claim is invalid?
Your first instinct might be to fight it.
After all, why should the estate pay a debt it doesn't owe?
But sometimes the practical answer is different from the legal answer.
Think about what it would cost to contest that claim. An attorney might spend an hour or more reviewing the claim, preparing an exception, filing it with the court, and communicating with the executor. Depending on the attorney's hourly rate, the estate could easily spend more than one thousand dollars fighting a $100 claim.
In that situation, paying the claim may actually be the more economical choice.
I was reminded of this recently when I got a parking ticket outside the post office.
I know I paid for parking.
I remember standing at the meter with our foster puppy Michael tugging on the leash while I tried to keep him out of the landscaping. I pushed all the buttons, entered my license plate, and inserted my credit card.
Until that day, I never printed my receipt. I didn't want to waste the paper. I just assumed the system would work the way it was supposed to.
When I came back to my car, there was a $20 parking ticket on the windshield.
The ticket explained that I could contest it. So I called the number provided.
A recording informed me that the entire office was on vacation. The message was old. I couldn't leave a voicemail. There was no obvious way to talk to a human being.
At that point, I had a decision to make.
I could spend my time fighting a $20 ticket that I knew was wrong, or I could pay it and move on with my life.
So I paid the ticket.
Not because I thought the ticket was valid but because it wasn't worth my time to prove it wasn't.
And now I print my parking receipt every single time.
The point isn't that invalid claims should always be paid.
The point is that executors should think about the economics of the situation, not just the principle.
Sometimes the right answer is to fight and sometimes the right answer is to write a check and move on.
As I record this episode, I still don't know how Michael's story ends.
Maybe by the time you listen to this episode, he'll be curled up on a new family's couch. Maybe he'll still be sleeping under my desk while I work.
I don't know.
And as much as I'd like to skip ahead to the happy ending, I can't.
The process has to play out first.
Probate is often the same way.
Executors want to distribute the money, beneficiaries want their inheritances, and everyone wants to close the file and move on. That's understandable. Grief is exhausting, and probate can feel like one more thing standing between you and the next chapter.
But just because you're ready for the story to be over doesn't mean it's over.
Sometimes you have to wait for the creditors' deadline to pass, gather more information and follow formalities that feel frustrating or unnecessary.
And sometimes the hardest part of probate is simply being patient enough to let the process work the way it's designed to work.
Thanks for listening today.
If you have a question you’d like me to answer on a future Tuesday Triage episode, submit it at deathreadiness.com/tuesdaytriage. That’s deathreadiness.com/tuesdaytriage. The link is in the show notes.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
