While strategizing your
estate plan you may hear the term "interested person." This is a term
of art that has specific meaning in estate planning law. It's any individual or
entity who has a legally recognized property interest in an estate. Interested
persons can include a spouse, heirs, beneficiaries, and creditors.
Interested persons have rights in the estate that others do not. Interested persons can demand notification or bond to protect their property interests. Interested persons have legal standing to challenge (contest) the Will.
Those property interests come into play when your estate is being settled in probate. At the beginning of the probate process, the personal representative must compile an estate inventory, which lists the probate assets. Before any beneficiaries can receive assets, valid debts must first be paid from the estate. Creditors must receive a copy of the estate inventory, and they have a defined period of time in which to make claims against the estate in probate.
It is the personal representative's responsibility to ensure that valid debts are paid from the estate. However, Minnesota law sets out a priority in which certain creditors are to be paid, and if the estate assets are exhausted, some of the "lower priority" creditors may not be paid at all.
If, after creditors have been paid and there are no assets remaining in the estate, the estate is said to be insolvent. This means the beneficiaries will receive nothing, even if the Will has language providing for an inheritance. As mentioned above, valid debts are to be paid first.
* * *
A qualified estate planning attorney can help you create a strategy that helps preserve your assets for your loved ones.