One of an estate trustee’s duties is to pay the debts that a deceased individual owed when he or she died. As I have previously discussed, the estate trustee is generally not personally liable for the deceased’s debts – they are paid from the assets of the estate. However if an estate trustee distributes the estate assets to the beneficiaries before debts have been satisfied, the estate trustee might be personally liable for any amounts owing.
One way for an estate trustee to avoid being on the hook for debts after the distribution of th estate is to advertise for creditors. Section 53 of the Trustee Act provides that an estate trustee will not be personally liable for claims by creditors within the amount of time specified in a notice published. In other words, if the estate trustee puts an advertisement in a newspaper asking creditors to contact her within a specific time, the estate trustee will not be personally liable for claims that are not made by the specified date if she then distributes the estate.
Unfortunately, s. 53 is not specific about the form, content, or timing the notice should take. However, certain rules of convention have emerged. Generally, an estate trustee should advertise at least three times in a local paper (where the deceased lived) and allow no less than thirty days between the date the advertisement was first published and the stated date on which the estate will be distributed.
As a final note, it is important to be aware that s. 53(2) of the Trustee Act provides that the effect of advertising for creditors is not to actually extinguish any claims the creditors might have – it is simply to protect the estate trustee. The creditors will still have the ability to trace the distributed assets of the estate to the hands of the beneficiaries.