Can an Estate be closed if a lawsuit has been created?
There isn’t anything that slows down probate more than a pending lawsuit. Probate makes sure that all of the loose ends are tied up in a deceased’s life. If someone creates a lawsuit throughout the proceedings, the estate typically is not able to be closed until the lawsuit has been resolved. Your immediate family may be able to receive allowances, which is money out of your estate to allow them to live comfortably, if your state provides this. However, if your state does not provide allowances, your beneficiaries may not receive any funds until the process is completed.
What is the Purpose of Probate?
If you are like most, you probably own property as well as owe some debts. Your death does not mean that your debts go away and if you own property that is solely in your name and it has not been transferred to beneficiaries, it is necessary to go through probate. The executor of your will becomes responsible to submit any documents to the probate court to be validated. They are then responsible to collect and value your property and provide your creditors notice that you have died. Anyone who is directly affected by your estate is able to file a lawsuit to protect their interests during the probate process.
Denied Creditor Claims
Creditors are usually a cause of lawsuits during the probate process. When your executor provides them notice of your death, creditors have a small window of time, between a few months to a year, to present their claims for payment to the estate. One of the roles of the executor is to decide if the claims are legitimate. If the executor decides that the claim is not legitimate, they are able to decline paying them. Once the claim is denied, the creditor is then able to file a lawsuit with the probate court to ask the judge to overrule the decision of the executor. The executor is unable to close your estate until the court has made a decision. This is because if the court decides the claim is valid, there could not be any money leftover if the executor has paid out your estate to the beneficiaries already.
Wrongful Death Lawsuits
The cause of your death could cause a lawsuit during probate. If your death was caused by an accident that took place because of someone else’s negligence, your executor could file a lawsuit for damages. This lawsuit would take place in civil court instead of probate court, however, if the lawsuit is won, the proceeds would go to your estate. If the estate is closed before the verdict is reached, there’s no legal entity to hold your money when the case is settled to transfer it out to your beneficiaries. These laws do vary by state. In some states, a surviving family member, such as a spouse or children, could file a wrongful death lawsuit without having to involve the probate proceeding. A wrongful death attorney Washington D.C. residents rely on can help with additional questions.
Thanks to our friends and contributors from Cohen & Cohen, P.C., for their insight into wrongful death suits and how they affect estate planning.