Law Office of John S. Palmer Attorney at Law

Settlement of Creditors' Claims without Probate

Posted Saturday, June 26, 2010 by John S. Palmer

Creditors of a decedent may have months or years to assert a claim for payment from the assets of a decedent, even if the decedent’s assets are distributed directly to his or her heirs without any formal probate proceeding. However, a procedure is available to expedite the settlement of the decedent’s debts, even if no formal probate proceedings are instituted.

If no Executor has been appointed, the beneficiary or trustee entitled to receive substantially all of a decedent’s probate and nonprobate assets may act as a Notice Agent for purposes of seeking and handling creditors’ claims. If no single beneficiary or trustee is entitled to receive substantially all the assets, then those persons who, in the aggregate, have received or are entitled to receive substantially all of the assets may appoint a Notice Agent.

The Notice Agent pays a filing fee with the court and files a declaration and oath stating that he or she is qualified to serve and will faithfully execute his or her duties. The Notice Agent must publish a legal notice in the newspaper, once a week for three consecutive weeks, which serves as a general notice to creditors of their obligation to serve a claim on the Notice Agent. Creditors that are not reasonably ascertainable have four months from the date of first publication to file a claim for payment, or they will be forever barred from seeking payment from the decedent’s assets. If creditors are reasonably ascertainable, they must present a claim within 24 months of first publication of the legal notice; however, if they are sent a copy of the legal notice by first class mail, the time limit for filing a claim is shortened to 30 days after mailing.

The Notice Agent may accept or reject a claim; if a claim is rejected, the creditor has 30 days to file a lawsuit seeking payment.

The probate and nonprobate assets of the decedent that were subject to the satisfaction of the decedent’s general liabilities immediately before his or her death are liable for any claims. The Notice Agent may pay a claim out of the decedent’s assets that have been received by the Notice Agent, or as may be provided by court order or by written agreement of all of the decedent’s beneficiaries.

The powers of a Notice Agent cease immediately upon the appointment of an Executor of the estate of the decedent, and the Executor may adopt, ratify, nullify, or reject any actions of the Notice Agent.

If you have any questions or would like to schedule an appointment, please call us at (425) 455-5513, toll free at (877) 455-5513, or info@palmerlegal.com.