Stautz Law

Tag: Creditors

  • Creditor Notices in Indiana Probate

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    Good morning, folks. It’s Andy Stautz at Stautz Law. We’re back for another quick talk about Indiana probate administration. Today’s topic is creditor notices.

    [We talked more generally about the Notice of Administration in an earlier post!]

    Who is a Creditor of the Estate?

    What do we mean when we talk about creditor notices?  

    Well, creditors are people who hold debts owed to them by the estate. So this can be real things like a car loan. You know, a big formal thing that you’d think of as a debt. It can also include little things like an unpaid last utility bill, right? It’s not like something that the decedent signed on for a loan but the power and light company or whatever provided them with the service in expectation of getting paid later. You know, it counts as a debt. So they’re a creditor, potentially.  

    OK. So creditors are everybody who might have these debt claims against the estate. Notices are how you tell the creditors about the fact that the estate exists. 

    The Creditor Claims Process in Indiana Probate

    And this is important because in probate administration there’s a very set way to administer these claims: basically to gather them all and figure out which ones are valid and pay the ones that are valid and get rid of the ones that aren’t.  

    Because the point of probate administration is to settle everything, right? We don’t want creditors of someone who’s died coming back years later or pursuing the heirs. Or, you know, we’ve got to get it done now. So.  

    There are time limits for when creditors can file their claims. We either have talked about that or will talk about that. There are time limits for when claims can be filed. There are ways to evaluate, you know, whether they’re valid or not. There’s an order of priority for… if there’s not enough money to go around, who gets paid first?  

    But the creditors need notice so that they can participate in that process.  

    How Creditors Get Notice

    Creditor notice is required in two different ways: 1. you publish the notice of estate administration – in every case, right? the probate code says when letters are issued, you publish notice. So in the newspaper there’s this whole section. You know, we’re administering the estate of so and so. No ordinary person reads that; the creditors read that, and so that’s one way they could find out about the estate administration in time to make their claim.  

    The other way is the personal representative, or usually it’s me, the personal representative’s attorney, mails a specific note… It’s the same words, but mails a notice to “known creditors” or “reasonably ascertainable creditors.”  

    How to Find Creditors of the Estate

    Who’s that?  

    Well, if you get bills in the mail, right? If you look in their emails and you see correspondence with a loan officer. Kind of…. There’s … you sort of figure out who that might be. And then you’ve got a duty to tell them specifically.  

    So you publish to the whole world and then you say, oh, and by the way we’re pretty sure these people could have claims, so they get mailed a notice.  

    What is a Certification of Creditor Notice?

    And then either the personal representative or the attorney has to certify to the court, “yes, court we mailed notice to these people.” OK? And sometimes that’s none. Sometimes that’s just the Unit: Medicaid estate recovery, which we talked about last time.  

    And sometimes that’s a whole list.  

    The notice… sending the notice doesn’t commit you to anything. It doesn’t promise that the claims are valid, or that these are actually creditors. It’s just kind of “here are the people we think might be involved.” Because the idea is for it to be fair, right? You don’t want to like sneak away with this.  

    The point of probate is it’s all above board. We get all the claims out in the open. Right, we pay the right ones and we’re done. So creditor notice is kind of what starts that. So that’s the process I hope I’ve explained it. I hope I’ve explained why you do it. You know, if you’re working with me and I’m your attorney, I will of course walk you through this and. We’ll work on it. If you are a potential client or you’re just wondering, you can always give me a call. And I can give you more specific legal advice if you are my client, but this has just been a general overview and I hope it’s been helpful.  

    Thanks and see you next time. 

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  • What is the Medicaid Estate Recovery Program?

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    Introduction: When Does MERP Matter?

    Good morning. It’s Andy Stautz at Stautz Law. Today I am back for a talk about another probate and estate planning topic. And that is Indiana’s Medicaid Estate Recovery Program, a.k.a. “MERP” M-E-R-P. 

    You need to know about this in two contexts. OK. On the one hand, you need to know about Medicaid estate recovery when you’re doing Medicaid planning. So as an elder law topic. And on the other hand, you need to know about Medicaid estate recovery when you’re doing a probate administration, whether or not the decedent (you know, the person who died) was on Medicaid.  

    Estate Recovery in Medicaid Planning

    OK, so let’s talk about let’s talk about estate recovery in the elder law-Medicaid planning context first, but just briefly. The basic idea there is, in general, right, the government pays for a person’s care while they’re on Medicaid. And after that person dies, Medicaid has the option to make claims against the estate for the value of the care they provided. OK?  

    So it’s kind of like a claw back, I guess, or sort of a recovery to try to defray some of those expenses of Medicaid. So you know the government pays the Medicaid beneficiary during life and then after death, they say, OK, well, what can . . . Can we get some of that back? There are complicated rules about what is and isn’t available to Medicaid estate recovery. And those are outside the scope of today’s talk.  

    You just need to know, you know, it’s not a blanket… They can’t take everything you own. There are exceptions for a surviving spouse who’s living in in the house or, you know, keepsakes and other, like, personal furniture stuff. So lots of rules. We’re not talking about them today, but the basic idea is [that] you plan ahead to try to account for the possibility of future estate recovery and avoid it if possible or you know, make it less. …. harsh on the survivors or heirs and beneficiaries. 

    MERP – “The Unit” – as a Known Creditor in Probate

    On the other side, and this probably comes up more often because it applies not just to people who are on Medicaid, but to everybody. The Indiana Probate Code says anybody who dies older than age 55 has, as a reasonably ascertainable creditor, Medicaid. Basically the probate code, says “You need to assume that anybody older than 55 might have been on Medicaid. And might be subject to Medicaid estate recovery.”  

    That matters because in probate you’ve got a duty to tell all the creditors that you’re administering the estate so that they can come forward with their claims if they have any.  

    So basically, in every probate estate, for someone who dies above the age of 55, you have to mail a noticee to the Medicaid Estate Recovery program. (It’s called “the Unit” in the probate code.) You’ve got to mail notice to the unit. And say, you know, if you’re coming forward with a claim, you need to do it now. (And there are time limits for that, which is again beyond the scope of this talk)  

    But that’s where it comes up. Even if the person who I wasn’t actually on Medicaid. There’s just this presumption, so every pretty much every time you’re going to be sending notice to the unit and on your list of creditors, you know you’re going to say, “Yep, we told the Unit – we told Medicaid Estate recovery”  

    Whether or not they come forward with a claim, it depends on all sorts of other things, but that presumption is there, so that’s where it comes up very often.  

    Conclusion

    So that’s it, concludes my talk. That’s just kind of what Medicaid estate recovery is. MERP, the Unit, in those two different contexts.  

    You’ve got to dig deeper based on what your situation is, but now at least you know what it is, kind of what it does, the reason for it. Hope you’ve enjoyed that talk and call me to discuss your specific case if you need help! Thanks. Bye!

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