How do creditors get paid after someone dies? There are three options in Washington state, two of which I will discuss here: 1) Wait and See; or 2) Publication of a Notice to Creditors. I very strongly recommend option 2.
In Washington and depending upon which of the above options you select, creditors will have either 24 months or 4 months to file a claim for payment against an estate. You are probably thinking, ‘that’s a pretty big difference, what gives?’. The difference is dependent upon whether the estate Personal Representative (also known as an Executor sometimes) utilizes the Notice to Creditor process.
Chances are pretty good that you have already seen a Notice to Creditors in your local paper. It is one of the legal notices that appear near the wanted and ad sections of the paper. By opting to publish one in the county where the decedent lived, you can shave twenty months off the amount of time a creditor has to file a claim for payment against the estate. Notices to Creditors may be used for estates that are settled via probate and for estates that are settled outside of the probate process.
The process for publishing a Notice to Creditors is pretty straightforward, although there are some associated costs. A Notice to Creditors needs to be filed with the Court and there is a filing fee if it is not done as part of a probate process. Once it is filed with the Court, it needs to be published for three consecutive weeks in a paper that circulates in the County where decedent lived. Publication costs are in the neighborhood of $500 but vary from county to county and newspaper to newspaper.
Once you have filed a Notice to Creditors with the Court and had it published, you are required to supply the Notice to all ‘reasonably ascertainable’ creditors. A creditor is considered ‘reasonably ascertainable’ if it would be discoverable if the personal representative went through the decedent’s personal records. I recommend running a credit check for the decedent as a tool in discovering where decedent held accounts. Once the Notice is supplied to all reasonably ascertainable creditors, the ball is then in the creditor’s court. If a creditor expects payment, then it must follow the steps outlined in the statute.
At the end of the four-month creditor claim period, any additional creditors are barred from filing claims, unless the creditor can prove 1) they were reasonably ascertainable; and 2) they did not receive the notice to creditors as the statute requires. The four-month claim period ultimately assists in streamlining the probate process and allowing estate personal representatives to get beneficiaries their share in a more expedient manner.
