Someone Says the Estate You’re Dealing with Owes Them Money—Now What?

Money matters will dominate your life when you're serving as the executor for someone who has recently passed away. Long before you begin to distribute money to the estate's heirs, you'll need to cover the funeral costs with the deceased person's money, pay any outstanding bills, transfer funds, close bank accounts, and many other financial tasks. One financial issue that you might encounter is hearing from someone whom you may or may not know that the deceased person owed him or her money. Technically, these funds should come out of the estate, but you want to do some verification before you write a check. Here are some steps to follow.

Find a Record

It's an easy and all-too-common scam for an unscrupulous person to target the estate of someone who has passed away and say that he or she is owed money. While you shouldn't act in a hostile manner to this person, you should have some degree of skepticism. Before you even think about giving the person any money, you need to find some type of record. This may take some time to look through the deceased person's financial affairs. Perhaps you'll see a note stating that he or she owes money to this person for some reason.

Ask the Person for Proof

While you'll want to do some digging yourself, you shouldn't shy away from putting the onus on the person who has contacted you. Ask if he or she has a written contract that indicates how much money the deceased person owes him or her. Ideally, the person can provide this—although you'll want to thoroughly assess the contract to ensure that your loved one did indeed sign it. If the person doesn't have a contract, you should express how you're wary of the situation and that while you understand the person might be frustrated, he or she should try to see things from your perspective.

Consult Your Attorney

Don't be afraid to take your concerns to your loved one's attorney or the attorney you've hired to help you deal with the matters of the estate. As a legal professional who experience in estate planning, the attorney will likely be wary of this situation and may simply tell you to refer the person to his or her office. If the person is legitimately owed money—but you can't find any proof of it and do not offer payment—they may take legal action against the estate. Your attorney will be an asset through this process.