PROCEDURE FOR OBTAINING PAYMENT OF A DEBT AFTER DEBTOR’S DEATH

Posted in Blog, Business Law by on July 31st, 2014

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By: Dianna M. Gallagher, Esq.

cyber-bullyingUnder the Massachusetts Uniform Probate Code, effective March 31, 2012, a creditor of a deceased debtor must bring an action against the debtor’s estate within one year of the debtor’s date of death or else the creditor’s claim is barred. See Mass. Gen. Laws Chapter 190B, Section 3-803(a). The creditor must also, within that one-year period, serve process on the personal representative of the estate by way of in-hand service, service accepted by the personal representative, or filing a Notice of Claim with the Register of Probate. The Notice of Claim must state the name of the estate, the name and address of the creditor, the amount of the claim and the court in which the action against the estate has been brought.

The few exceptions to this short one-year statute of limitations for claims against estate include: (1) any proceeding to enforce a mortgage, pledge, or other lien upon property of the estate; (2) an action for personal injuries or death meeting certain criteria; and (3) collection of compensation for services rendered and reimbursement for expenses advanced by the personal representative or by the attorney or accountant for the personal representative of the estate. See Mass. Gen. Laws Chapter 190B, Section 3-803(d).

Unfortunately for creditors, there can be instances where an estate is not probated and a personal representative is not appointed within one year of the debtor’s date of death. In such an instance, in order to preserve its claim, the creditor would have to file a petition with the appropriate probate court for the appointment of a special personal representative, so that it could then commence an action against the estate and serve said special personal representative within the one-year period. See Mass. Gen. Laws Chapter 190B, Section 3-614. It is advisable that such a petition be filed at least several months before the expiration of the one-year period, since there is no provision tolling the limitations period while a creditor seeks to have a personal representative appointed to an estate. Additionally, it is prudent that the creditor research, to the best of its ability, the estate’s potential assets and liabilities and determine the likelihood of full or substantial payment of its claim prior to filing a petition for the appointment of a special personal representative in order to ensure that it is worth the time and expense.

If a creditor has missed the one-year deadline, it may still seek to obtain payment of its claim from an estate by filing a complaint in equity with the Supreme Judicial Court and filing a Notice of Claim with the Register of Probate. See Mass. Gen. Laws Chapter 190B, Section 3-803(e). In rare circumstances, if the Supreme Judicial Court finds that justice and equity require recognition of the claim and that the creditor is not chargeable with culpable neglect in not prosecuting the claim within the one-year limitations period, the Court may give the creditor judgment for the amount of his claim against the estate.

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