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Estates, probate and the reach of creditors

On Behalf of | Aug 8, 2016 | Firm News, Wills |

Ohio residents might wonder whether or not their creditors will be able to take money from their estates after they pass away. Creditors do have the right to make claims against estates through the probate process, but not all assets go through probate. They are not able to touch assets that pass directly to designated beneficiaries outside of probate.

People who designate beneficiaries for assets such as individual retirement accounts, 401(k) accounts, bank accounts and other property with transfer-on-death provisions are able to pass them directly to their named beneficiaries. For these types of assets, creditors are unable to touch them. The same is true for life insurance policies.

Other assets that are listed in the person’s will are different. The executor of the estate will be responsible for identifying and locating all of the assets. He or she will also contact all of the beneficiaries as well as the creditors. Any creditors that make claims against the estate will be paid what they are owed before the assets are distributed.

After the creditors are paid, the executor will then distribute the remaining assets according to the testator’s wishes. Having both a will as well as a number of assets that pass outside of probate can help make certain that the beneficiaries will be provided for. A person may want to get help with estate planning from an attorney who can suggest different types of tools that might work the best. The attorney may then help with drafting the needed documents in a way that is likely to minimize the likelihood of litigation after the client has passed away, allowing the client to have greater peace of mind.

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