Notice to Creditors Michigan
When a loved one passes away, families experience a very difficult, emotional time. While still grieving, they must settle their loved one’s estate. In order to do this, they must determine the estate’s assets and financial obligations. Depending on the size of the estate, this may be a tremendous task. Also, the decedent may not have proper estate planning documents in place. Consequently, many people seek the advice and guidance of an experienced estate planning attorney during this difficult time.
Does Debt Go Away After Death?
No. Michigan Law dictates that all debts must be paid from the deceased person’s estate. In fact, the estate’s personal representative must publish a notice to creditors letting them know about the recent death. MCL 700.3801 states;
a notice as provided by supreme court rule notifying estate creditors to present their claims within 4 months after the date of the notice’s publication or be forever barred.
If the personal representative knows any creditors, the representative must send the creditor a copy of this notice. The representative usually learns creditor’s information by looking through the decedent’s mail, personal records, and ordering three credit reports: Experian, Equifax, and Transunion.
Each estate is different. Some are very simple with only taxes and utility bills. Other people may pass away with tremendous debt. Additionally, estates vary in size. Very large estates require legal assistance. An experienced attorney can protect assets and provide legal guidance to ensure legal compliance when settling the estate.
Is a Notice Always Necessary?
No. There are times when an official notice is not necessary. For example:
- The small estate is administered under MCL 700.3982 or MCL 700.3987
- The deceased passed away over three years ago.
- Creditors that were already paid in full.
- The estate has no assets.
- Notice was already given by another person.
Do Creditors Ever Contact Family Members to Recover Debt?
There are a few times you may be responsible for a deceased family member’s debt. Examples include:
- You share a joint credit card.
- You cosigned a loan with the decedent.
Which Assets are Safe from Creditors?
When a loved one passes away, life insurance policies and any retirement accounts are safe from creditors. Certain trusts are also secure. Michigan’s homestead laws are a bit complicated. This is one area where an attorney’s guidance becomes necessary.
Claims: Allow or Disallow
The personal representative decides to allow or disallow any claim against the estate. In other words, the representative must ensure all claims are legitimate. When a personal representative receives a claim they have 63 days to approve or deny it. If the representative can’t find the claimant to pay the claim, MCL 700.3807(3) provides protection for the personal representative. This statute states that an approved claim may be later disallowed by the courts if the personal representative, an attorney, or other estate representatives attempted in good faith to make payment and could not locate the claimant. Once again, an experienced estate attorney will guide you through this process.