Detailed Answer
When a loved one’s estate enters probate in Hawaii, the personal representative must identify, evaluate and resolve creditor claims before distributing assets. Following these steps helps ensure you comply with Hawaii law and avoid personal liability.
1. Identify Known and Potential Creditors
Begin by reviewing the decedent’s financial records, including bank statements, credit card statements, and medical bills. Compile a list of known creditors and estimate any contingent or unrecorded debts.
2. Provide Notice to Creditors
Within 30 days of appointment, you must send written notice to all known creditors and publish a “Notice to Creditors” in a newspaper of general circulation in the county where the probate is pending. See Haw. Rev. Stat. Chapter 560 (Creditors’ Claims).
3. Review and Evaluate Submitted Claims
Creditors have 45 days after the last publication date to present claims. When a claim arrives:
- Verify the debt amount and supporting documentation.
- Check for statutory priority (e.g., funeral expenses, taxes, secured debts).
- Respond in writing if you dispute all or part of the claim.
4. Negotiate a Settlement
Open a dialogue with the creditor or their attorney. You can propose:
- Partial payment in exchange for a full release.
- Extended payment plans.
- Discounted lump-sum settlements.
Document all offers and counteroffers. Keep detailed records of communications.
5. File a Petition to Approve Compromise
If you reach a settlement, you must petition the probate court for approval. Under Haw. Rev. Stat. Chapter 560, the court reviews the fairness of the compromise, considers the estate’s liquidity and hears any objections from beneficiaries or creditors.
6. Disburse Funds and Update Accounting
Once the court approves the settlement, pay the creditor according to the approved terms. Then file an updated inventory and final accounting with the court, reflecting the settled claim.
Helpful Hints
- Keep copies of all notices, claims, settlement drafts and court filings.
- Track deadlines carefully: missed deadlines can invalidate your defense.
- Obtain written releases from creditors after settlement.
- Consider mediation if direct negotiations stall.
- Maintain clear communication with beneficiaries to manage expectations.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified probate attorney in Hawaii for guidance specific to your situation.