So some poor schmuck owes you money, and then he inconsiderately dies before he can settle up with you. You are left wondering if your chances of being repaid died with him.
Maybe. Probably. It depends on how adept you are at tiptoeing through the legal minefield of probate claims.
A “claim” is all debts owing by a decedent both before and after death. Included are promissory notes, credit cards, funeral expenses, taxes, and the costs of administering the estate.
Claims follow an artificial hierarchy that dictates how they get paid. The estate starts by paying the Class 1 claims and then pays the lesser claims in order, unless and until it runs out of money.
But we are jumping ahead. The first thing that you, as a creditor, have to do is to properly present the claim to the executor of the estate. If you mess up the presentation of the claim, you lose.
Note that there has to be an executor before you can present your claim. That means someone, somewhere, has to start a probate proceeding by filing an application in the proper court. If no one else steps up to the plate, then you, as the creditor, can file the application. Once the executor is appointed, you can start pursuing your claim.
How you do that depends on whether the estate is an independent administration or a dependent administration. For a dependent administration, everything must go through court – the claim, the executor’s decision to allow or disallow the claim, even the claim payment.
By contrast, an independent administration is the wild west. Only a few of the statutory claim procedures apply.
Back to claims – the timing and type of claim depends on whether your claim is secured or unsecured, and whether you receive a notice letter. An executor is required to publish a notice to creditors in the newspaper, and then send notice to each secured creditor. The executor may, but isn’t obligated to, also send notice to unsecured creditors.
If it is an independent administration and you receive a notice, then you have to file a claim. If you are a secured creditor, then you have to notify the executor about how you want your lien classified. That sets in motion a whole new set of procedures.
If you are an unsecured creditor and filed a claim, then the executor does not have to tell you or the court whether the claim is approved or disapproved. The only way you will know for sure, absent receiving payment, is to file a lawsuit against the executor. That preserves your claim, but be prepared for a wait – the executor can ignore the suit until 6 months after he qualified as executor.
Are we having fun yet?
Knowing the class structure, understanding the administration procedures, using the proper form, delivering it by one of the three allowed methods, suing before your claim is time-barred – your best bet is to get a good probate attorney.
And don’t lend money.
Hammerle Finley Law Firm. Give us a call. We can help.
Want to receive our monthly email newsletter or book one of our attorneys for a speaking engagement? Email LegalTalkTexas@Hammerle.com and let us know how we can help.
The information contained in this article is general information only and does not constitute legal advice.