Talking about debts and taxes

When a person dies, they leave behind real and personal property, often subject to probate administration. But they may also leave behind debts, liens, taxes, and other bills that they incurred during their life. These financial liabilities must be settled before the remaining assets can be divided and distributed to the heirs and beneficiaries at the end of the probate process.

Paying the debts of the estate and distributing the remaining assets is one of the primary functions of the estate administration during probate. As part of the probate process, the personal representative of an estate should gather the decedent’s records to identify creditors. However, even after the most diligent search, some creditors may not be discovered. Different rules and notice procedures apply if the creditor is known versus if the creditor is unknown.

Under Nevada probate law, during the probate process, the personal representative of the estate is required to give notice to creditors. Known creditors are notified via mail. Unknown creditors are notified via publication. The notice to unknown creditors must be published three times over a period of, at minimum, ten days, and the dates of the first and last publication do not count toward the 10-day period.

If a creditor was not known to the personal representative when the notice was first published but is discovered before the time for filing claims against the estate expires, the creditor must be mailed a notice informing them of the timeframe for filing a claim. The timeframe is 30 days after the notice is mailed to the newly discovered creditor or the original expiration date, whichever is later.

Creditors then have a window of time to file a claim against the estate. Creditor claims are filed with the Clerk of Court in the county where the estate is probated. If the value of the estate is more than $100,000 but less than $300,000, creditors have 60 days to file a claim. If the estate is worth more than $300,000, creditors have 90 days. Claims that are not filed within the prescribed time period are forever barred. These deadlines are strictly enforced.

It is important that the personal representative diligently searches the records to discover all “readily ascertainable” creditors. It is not a good practice to avoid intentionally or negligently discovering the creditors. If the creditor can prove that they did not know of the decedent’s death, they might be allowed to file a late claim.

Once the publication is complete and all the notices are mailed as required, the personal representative of the estate must submit a certification of service that includes an affidavit that notice to the creditors was published.

Valid claims must be paid, but sometimes it is possible to negotiate with the creditor a payment for a percentage of the claim. Furthermore, when the probated estate is worth less than $100,000, minor children and/or a surviving spouse trump creditors. 

Serving as the personal representative of an estate is an important responsibility, and it is typically not easy. But when following the rules and with the right guidance, the process can be handled smoothly and without personal liability exposure for the personal representative.

Natalian Vander Laan is a Minden attorney.