Claims to Allow & Disallow During a Probate

/ December 26, 2013

Personal Representatives have many duties to a decedent’s estate. Previously, Jayne Sykora discussed how a Personal Representative is selected and what their duties consist of in “So You’re a Personal Representative. Now What?” and What Happens to Debt at Death”. One such duty is determining which creditor claims to allow and disallow and this post will focus on how a Personal Representative should make this determination.

What a Claim Is and Is Not

Claims are a decedent’s contractual and other liabilities, as well as the estate’s liabilities, which include administration and funeral expenses. Claims are not: taxes, title disputes of assets named within the estate, tort claims, mechanic’s liens, or wrongful death or other injury actions. The Personal Representative may pay any claim, but may be personally liable if another claimant is unable to collect from the estate based on the Personal Representative’s mishandlings. Additional commentary on personal representative liability is discussed in Jennifer Santini’s post, Handling Estate Debt”.

Claim Notice and Presentment Requirements

Jennifer Santini also previously discussed how the Personal Representative must proceed in providing notice to creditors as well as how creditors file a claim against the decedent’s estate. Check out “Creditors’ Claims Basics” for a review.

Claim Information Requirements

In determining which claims to allow and disallow, the claim must include:

1) the basis for the claim,

2) the claimant’s name and address,

3) the amount,

4) the due date if it’s not yet due,

5) the nature of the claim uncertainty if it’s contingent or unliquidated, and

6) the description if it’s secured.

However, claims that do not contain the final three pieces of information will still be considered presented to the Personal Representative

Claim Timing Requirements

Claims Before Death

Finances - iStockIf a claim arose before death, the creditor must present their claim by the latest, applicable date otherwise the Personal Representative may disallow the claim. The claim must be presented to the Personal Representative: 1) four months after the court administrator’s notice in a legal newspaper, 2) one month after being served notice by the court administrator, or 3) one year after the decedent’s passing regardless of whether notice was published or served. 

Claims After Death

Claims that arose after the decedent’s death must be presented within four months after the claim arose. Similarly, contracts with the Personal Representative must be presented within four months after the Personal Representative’s performance is due.

Late Claims

Creditors that fail to submit a claim within the required statutory timelines may still have another opportunity to collect from the decedent’s estate. First, the Personal Representative and estate successors may waive the statute of limitations and pay any claim if the estate is solvent. Second, the creditor or Personal Representative may petition the probate court. 

Claims Not Bound By Timing Requirements

These time requirements for claims do not affect pledges, mortgages, or liens on the estate property. They also do not impact liability of the decedent or Personal Representative on matters covered by liability insurance up to the amount of coverage. Additionally, the decedent’s final illness expenses, funeral expenses, debts, taxes, as well as compensation for the Personal Representative and their attorney are not bound by these time requirements.

Claim Disallowance Requirements

To disallow a claim, the Personal Representative must notify the claimant by mail within two months after the four month claims period otherwise it is deemed allowed. Allowed claims are subject to interest charges 60 days after presentation. Interest charges may also exist for claims that are initially disallowed but later allowed. 

Claim Implications for Family and Friends

While the use of the term ‘creditors’ here and in the statutes may bring to mind the image of money owed to businesses, this statute has implications for other less formal credit arrangements. Family members and friends who feel that they are owed money or property by the decedent must be cognizant that under the statutes they are merely creditors and bound by the same statute of limitations. They run the risk of going unpaid if they expect to be entitled to assets under the will or other trust instrument and later discover that no such bequest exists. 

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