Everybody knows that good credit is important for receiving favorable financing terms when buying a car or a house. Let me give you another reason to keep your credit up – Estate Administration and Bad Credit can cause serious problems. Generally, if you have bad credit, you will NOT be allowed to act as the administrator of the estate of parent or loved one.
When a person passes away without a Will, the closest next of kin can petition the Court to act as Administrator for the decedent’s estate. The Court will usually agree to let the next of kin act as Administrator provided that they agree to pay for a Surety Bond. A Surety Bond (also frequently called a Probate Bond) is basically an insurance policy that provides the intestate beneficiaries and creditors of the estate with a way to receive some money in the event the Administrator absconds with the funds.
The Court will require a Surety Bond in almost all situations in which the decedent dies without a Will. A person can only qualify for a Surety Bond if he or she has good credit or significant assets to their name.
Obviously, the way to avoid this situation is to make sure your parents and loved ones prepare a Will which states that no bond is required. However, if you find that you are involved in an estate administration in which the decedent did not prepare a Will, before you spend a lot of money trying to qualify as an Administrator, Executor or Trustee, make sure you have good credit.
Checking your Credit Score
When checking your credit score, be careful! There are many scam organizations that pretend to check your credit. Instead, they are phishing scams designed to obtain information about you. The only federally approved website for checking your credit is: AnnualCreditReport.com.
Administration of an Estate When You Have Bad Credit
Generally, when someone passes away without a Will, the next of kin have the first right to petition a Court to be named as an Administrator. (An Administrator is basically the same thing as an Executor. However, an Executor is appointed under a Will.)
Accordingly, if none of the next of kin has good credit, you can petition the Court to have another person (or corporate fiduciary) named as Administrator. The process goes more smoothly if all next of kin can agree on the same party.
For more information regarding how to handle an Estate Administration and Bad Credit, please contact probate attorney, Elizabeth C. Ketterson, Esq.