**Creditor** (noun) — An individual or entity to whom money is owed by a debtor, having legal right to payment from the debtor's assets.
A creditor is anyone you owe money to. In estate administration, creditors are people or organizations the deceased owed money to before death—credit card companies, mortgage lenders, service providers, medical facilities, anyone with an outstanding bill.
When someone dies, their debts don't disappear. Creditors have the right to be paid from the estate before beneficiaries receive anything. This is a fundamental principle of estate administration—debts come first, inheritance second.
The executor must identify creditors, notify them of the death, allow them time to make claims, and pay legitimate debts from estate assets. Family members don't personally owe the deceased's debts unless they co-signed or guaranteed them.
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Creditor claims are a major part of estate administration. The executor must publish notice to creditors, giving them a deadline to submit claims. Claims filed within the deadline must be evaluated—some might be disputed if they're invalid or incorrect.
Paying creditors follows priority rules. Secured creditors (those with liens on property like mortgage holders) get paid first. Then come funeral expenses, administrative costs, and taxes. Unsecured creditors (like credit card companies) come last. If estate assets don't cover all debts, lower priority creditors might receive nothing.
You'll deal with creditors in every estate administration. The process protects both creditors' rights to payment and estates from false or excessive claims. Executors who pay beneficiaries before resolving creditor claims can be personally liable if the estate can't later pay legitimate debts. The creditor period—typically three to six months—protects executors by cutting off late claims.
**Related terms:** [Estate](/dictionary/estate), [Executor](/dictionary/executor), [Debts](/dictionary/debts)
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"Dad's estate had to pay all creditors—his mortgage, credit cards, and medical bills—before any money could be distributed to us beneficiaries."