One of the critical purposes of the probate process is to settle all of an estate’s outstanding debts. This means that all creditors must be notified of the probate of an estate so that they can make their claims. Significantly, the property of an estate cannot be distributed until any proper creditor claims are resolved.
Under the probate act, creditors are divided into seven “classes”. In essence, each class takes priority over the next and must be satisfied before anything is settled regarding the next class of creditor. These classes include:
- “Funeral and burial expenses, expenses of administration, and statutory custodial claims.” These include “reasonable” funeral and burial expenses and interest paid by any person, including a spouse. Obviously, honoring the deceased and allowing their community to pay respect are a moral and cultural priority. This is why funeral and burial expenses take priority and must be paid before any other.
- The surviving spouse’s or child’s award. Public policy and the law give priority to the surviving spouse and children of the deceased so that do not become destitute in the face of the estate’s debts. The Probate Act therefore delineates “Spouse and Child Awards” that theoretically provide a sum to the spouse and children to provide for their expenses for the nine months following the decedent’s death. This is to be at least $20,000 with at least $10,000 per child and should reflect the family’s standard of living prior to the decedent’s death.
- Debts due the United States. Outstanding tax obligations to the IRS and other Federal Debts are the next class of priority.
- Money due employees of the decedent for services rendered within 4 months prior to the decedent’s death. This is not to exceed $800 per claimant.
- “Money and property received or held in trust by decedent which cannot be identified or traced.”
- Debts due to the State of Illinois, and to any city, county, or school district.
- All other claims. This is where the remaining valid creditors of the estate must make their claims.
Heirs and legatees receive whatever is remaining after all valid creditor claims are satisfied in accordance with the Probate court. Depending on the estate’s obligations, it is not uncommon for little to no property to remain for distribution to the decedent’s heirs. This sometimes raises the question—to which a probate attorney can provide insight—of whether it is worth it to probate a seemingly insolvent estate.
Contact The Law Offices of Robert S. Thomas
Taking a case through probate is no small feat and requires a combination of hard work, diligence, and knowledge of the probate laws of Illinois. I have been an estate planning and probate lawyer for over twenty years and take great pride in providing smart, relevant legal guidance through probate. I can help you. Contact the Law Offices of Robert S. Thomas at 847-392-5893 to schedule a consultation or visit our website today.