What does an executor do about creditors and claimants?

Executors on many estates publish a notice called Notice to Creditors and Claimants in the newspaper in the area where the deceased lived. The purpose is to find out if there are any debts "out there" that the executor doesn't know about. As debts of an estate must be paid before beneficiaries may be paid, paying out the estate before knowing about all debts could end up in a mess.

The Notice to Creditors and Claimants directs anyone who believes that the deceased owed him or her money to contact the executor within a time specified in the notice. I've noticed that most articles and information on this topic stop there. They don't tell an executor what to do if someone makes a claim. This article is intended to take the information a little further.

If the executor believes that the claim is a legitimate claim, the executor may accept it and pay it from estate funds. This might mean waiting until there are funds available in the estate, but most creditors would rather wait to get the money than not get it at all. If the Inventory of the estate has not yet been filed with the court, the executor should add the valid claim to the inventory as a debt, and then pay it along with all other estate debts.

The executor may not be sure that a claim is valid, particularly if he or she has not had a lot of involvement with the deceased's financial affairs prior to the deceased's death. The executor may then require the claimant to verify the claim by producing a receipt, work order, written agreement, I.O.U or whatever paperwork is available. If the executor  still thinks that the claim is invalid or that the amount of the claim is wrong, he or she can serve a notice on the claimant that requires the claimant to come up with some conclusive proof. If that proof is not given within a certain time (in Alberta it's 60 days), the claim is lost. This means the claim can never be made again, as it is legally barred.

In practice, most claimants will send the supporting paperwork along with the claim in the first place, as it is just common sense to do so. It's rare that an executor ends up serving a notice to contest the claim.