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Probate and Estate Litigation Blog

Creditors' claims against an estate

Although this blog has discussed probate disputes between family members extensively, Saint Paul residents also need to realize that sometimes, probate litigation can emerge from outside of the family itself. For example, third party creditors can allege that the person who died owed money to the third party, and then try to take that money out of the proceeds of the estate.

While it is possible that a person or business, or even a governmental agency could demand money that the person who died never owed in the first place, it is likely that an issue involving an outstanding debt will in fact be a question of estate valuation. Specifically, it may be difficult in some situations to determine exactly how much the person who died actually owed at the time of his or her death.

In this respect, families in Minnesota should be aware that state law prescribes a very specific process that creditors must follow if they want to try to collect from the proceeds of an estate. A creditor must submit a claim against the estate's proceeds within a very strict timeframe; otherwise, the creditor will not be able to pursue the estate for money.

Once a creditor submits a proper claim, which should give some details about what is owed to whom, the personal representative of the estate will have the option to "disallow" all or part of the creditor's claim. If the personal representative does so, then the estate and the creditor will be given an opportunity to make their respective cases in court.

This information is simply a general overview of Minnesota law, and some exceptions may apply. For specific questions about a specific case, families who are concerned about creditors eating away at an estate should consult with an experienced Minnesota probate litigation attorney.

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