The payment of creditor claims in Minnesota probate law is a complicated legal issue. Why?
Because there are such things as “exemptions” and “priority of claims”. There are things as “partial allowances” and “total dissalowances”.
Furthermore, it makes a big difference whether there is a surviving spouse or the deceased person’s descendants (children).
In this article I will try to summarize the basics of creditor claims under the current Minnesota probate law.
The basics of creditor claims in Minnesota probate law
The administration of an estate in Minnesota does not just take care of the proper distribution of a deceased person’s assets. A very important part of the probate process is the dispensation of creditor claims.
The responsibility of making valid claims lies with creditors. However, it is first the personal representative’s responsibility to provide valid, legal notice to all creditors of the estate.
Minnesota probate law is written to simultaneously protect the interests of creditors while allowing for the quick and efficient distribution of estate assets to intended beneficiaries.
In short, once proper notice that the probate estate has been opened has been given to the creditors by the personal representative, the creditor must file a “claim” against the estate for any “obligation” arising during the deceased person’s lifetime and for claims arising after death, including funeral expenses and expenses of probating the estate.
The creditor is required to inform the personal representative of the claim by:
(1) delivering or mailing a written statement of the claim to the personal representative or his/her attorney;
(2) file a written statement of the claim with the court administrator, or;
(3) commence an action against the personal representative in any court where the personal representative may be subjected to jurisdiction.
In general, the presentation by a creditor will consist of the delivery of a written notice of the creditor’s claim to the personal representative. The creditors claim is deemed to be “presented” when (1) the claim is received by the personal representative or (2 the claim is filed with the court.
Finally, the probate courts in Minnesota typically do not notify the personal representative when a claim has been filed. It is the duty of the personal representative or the Minnesota probate attorney to determine whether claims have been filed with the court.
Priority of creditor claims in Minnesota probate law
Classifications of claims under Minnesota probate law is provided by Minnesota Statute 524.3-805.
In sum, the law states that “[i]f the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order”:
(1) costs and expenses of administration;
(2) reasonable funeral expenses;
(3) debts and taxes with preference under federal law;
(4) reasonable and necessary medical, hospital, or nursing home expenses of the last illness of the decedent, including compensation of persons attending the decedent . . .
(5) reasonable and necessary medical, hospital, and nursing home expenses for the care of the decedent during the year immediately preceding death;
(6) debts with preference under other laws of this state, and state taxes;
(7) all other claims
Additionally, under the statute, there is no preference given in the payment of any claim over any other claim of the same class. Finally, as the language of the law indicates, the only claims with “priority” over all others are claims related to costs associated with hospital and medical care. There is a long list of laws related to payment of medical claims.
For more information about Minnesota probate law and creditor claims contact Joseph M. Flanders.
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A Minnesota law firm focusing on guardianships, probate, estate planning, and family law. The client-focused practice brings years of experience and high-quality legal representation to Minnesota families and businesses. Find out more about Flanders Law Firm, LLC at www.flanderslawfirm.com. Contact the firm at 612-424-0398.