LEGAL GUIDE
Written by attorney Anne Debelius Lopiano | Jul 23, 2010

Handling Claims Against an Estate

I. INITIATING THE PROBATE PROCESS E. HANDLING CLAIMS AGAINST THE ESTATE &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp SUMMARY The PR (and therefore you the attorney) have several tasks to do with regard to claims against the estate: 1. Take reasonable steps to ascertain what the decedent's debts are; 2. Determine whether any asserted debts are not truly legally owed; 3. Determine whether the estate is solvent (can pay all specific bequests and all debts and necessary expenses of administration) 4. If insolvent, prioritize the expenses that must be paid before others and categorize those which may not be paid except by court order or consent of all creditors of that class; 5. File and serve on appropriate parties an allowance or a disallowance as to every debt or asserted debt; 6. Petition the court for approval of any payments as to which there may be potential controversy; 7. Include the exact amount of any debts to be paid in your Account. 8. Make sure all estate legitimate allowed estate debts are paid in full before disbursing estate share to legatees/heirs. 1. Take reasonable steps to ascertain what the decedent's debts are. E&T ? 7-103.1. Notice to creditors NOTE: As the attorney or the PR, you and the PR need to make reasonable efforts to I.D. the legitimate creditors of the estate (not barred by the pre-death lapse of the 3 year general statute of limitation, 12 years for judgments, etc.) and knowing which asserted debts ones really must be paid, and if the estate is or may become insolvent, in which order paid. This entails at least the following work: Checking the judgment records of each county's courts of each and state in which the decedent owned any real property (not just the county where he lived.) See Rule 6-413 A creditor may file a claim in any county where the decedent owned land or held a leasehold interest. -- and you may not find it unless you go looking for it, because claimants do not always send a copy of the claim to you or to the PR. You do NOT want to get caught holding the liability bag for that late discovered claim after the estate has closed and all assets have been disbursed. Checking the "claims filed" records in the ROW/ Orphan's Court. As of this writing, this can only be done oneself on- site at the ROW Office, but may be available on-line in the near future. See note just above re all the counties where you need to look. Getting/ collecting the mail sent to the decedent around and after the date of death, to determine what is owed. REALLY PUZZLING: That said, the statute E&T ? 7-103.1. Notice to creditors, at section (c)(2) provides that: (emphasis supplied) "The personal representative, individually and on behalf of the estate, shall not be liable for failing under this section to ascertain or notify a creditor or for giving notice to a person who is not a creditor of the decedent." NOTE: So, while we have apparently clear lines drawn by statute and case law as to the absolute bar to late filed claims, AND the apparent protection of PRs and estates (and distributees?) in E&T ? 7-103.1, what then is really the duty of the PR to look for creditors? The apparent conflict between the above cited provisions of law and the exact meaning of ? 7-103.1(c)(2) is a less than perfectly resolved area of law. Err on the side of caution, look for creditors, and handle them appropriately. It is certainly the safest practice always to file a disallowance of claim even as to a late filed, time-barred claim; further, just because the statute says the PR may not be held liable for not notifying a particular creditor in writing, it will not necessarily stop the creditor from suing, so making oneself aware of all asserted creditors is important. 2. Determine whether any asserted debts are not truly legally owed. A. Has the creditor filed a claim? General Rule: The creditor must file his claim within 6 months of death, or be barred thereafter. Md. ESTATES AND TRUSTS Code Ann. ? 8-103 Limitation on presentation of claim: (emphasis supplied) "(a) In general. -- Except as otherwise expressly provided by statute with respect to claims of the United States and the State, all claims against an estate of a decedent, whether due or to become due, absolute or contingent, liquidated or unliquidated, founded on contract, tort, or other legal basis, are forever barred against the estate, the personal representative, and the heirs and legatees, unless presented within the earlier of the following dates: (1) 6 months after the date of the decedent's death; or (2) 2 months after the personal representative mails or otherwise delivers to the creditor a copy of a notice in the form required by ? 7-103 of this article or other written notice, notifying the creditor that his claim will be barred unless he presents the claim within 2 months from the mailing or other delivery of the notice. "(b) Claim for slander. -- A claim for slander against an estate of a decedent which arose before the death of the decedent is barred even if an action was commenced against and service of process was effected on the decedent before his death. "(c) Conduct of personal representative. -- A claim against the estate based on the conduct of or a contract with a personal representative is barred unless an action is commenced against the estate within six months of the date the claim arose. "(d) Liens not affected. -- Nothing in this section shall affect or prevent an action or proceeding to enforce a mortgage, pledge, judgment or other lien , or security interest upon property of the estate. "(e) Certain actions for personal injuries and/or damages to property instituted before death. -- If the decedent had been duly served with process before his death, nothing in this section shall affect an action for injuries to the person and/or damage to property which was commenced against the decedent. "(f) Certain actions against Maryland Medical Assistance Program recipients. -- A claim filed by the Department of Health and Mental Hygiene against the estate of a deceased Maryland Medical Assistance Program recipient, as authorized under ? 15-121(a) of the Health - General Article, is forever barred against the estate, the personal representative, and the heirs and legatees, unless the claim is presented within the earlier of the following dates: (1) 6 months after publication of notice of the first appointment of a personal representative; or (2) 2 months after the personal representative mails or otherwise delivers to the Department's Division of Medical Assistance Recoveries a copy of a notice in the form required under ? 7-103 of this article or other written notice, notifying the Department that the claim shall be barred unless the Department presents its claim within 2 months from the receipt of the notice." B. Is the claim time-barred, or is it timely? Check the statute above. Be aware that if the PR has done anything that can be construed as an admission or reaffirmation of the debt, which admission or reaffirmation occurred prior to the 6 month bar, the creditor may be able to a judgment against the estate, even if he never filed a claim timely. See Frank v. Wareheim, 177 Md. 43, 7 A.2d 186 (1939). Practice pointer: Have the PR refuse to speak to creditors and to wannabe creditors, and creditors referred to you instead. Refuse to continue nay creditor negotiate beyond the 6 month time line. Note: Be sure to disallow it promptly if at all. File ROW form 1129 and serve on creditor. ? 8-107. Allowance of claim, provides (emphasis supplied)

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