Clearly explaining the probate process
Creditors & Creditor Claims
One of the purposes of probate is to ensure that the decedent's legitimate creditors are paid before the distribution of assets to heirs and devisees. Any individual or entity to whom the decedent owed money at the time of his death is a potential creditor of the estate.
A personal representative who mishandles or fails to pay creditors of the estate may be personally liable. But how does a personal representative discover all of the valid creditors whom the decedent may have owed money?
Alaska law provides a formal process for determining the creditors of the estate, handling contested creditor claims, and prioritizing claims when the assets are insufficient to pay all creditors.
The Creditor Claim Process
After a Personal Representative has been appointed, Notice to Creditors may be published in a paper of general circulation in the area where the decedent lived. The purpose of publication of notice is to alert all creditors of the decedent and provide a fair opportunity for them to present their claims to the Personal Representative for payment.
Notice to Creditors also limits how long creditors have to present their claims for payment. Once the notice has been published, creditors have just four months to present their claims. These claims may be presented in many forms, from bills mailed to the decedent's last address to formal claims filed with the court or delivered to the personal representative. The Alaska Court system has a creditors claim form for submission of claims to the Personal Representative.
Once the four-month creditor claim period expires, creditors who have not presented their claims are forever barred from making a claim against the estate. If no notice is given to creditors through publication, creditors have three years in which they may present their claims against the estate.
Once a creditor presents a claim, the Personal Representative must determine the claim's validity. The Personal Representative may deny or contest any claim. If a claim is denied, the creditor must then file a petition for allowance to prove the validity of the claim. The court will then hold a hearing to determine whether or not the claim is valid.
Once all creditor claims have been submitted, the Personal Representative must determine whether there is enough money in the estate to pay all of the claims. If not, there are statutory guidelines to determine which claims have priority for payment.