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Nonprobate > Dealing with Creditor's Claims Presented
Handling Creditor's Claims in a Nonprobate Estate >
Determining Whether Creditor's Claims Are Lawfully Presented
Special Circumstance: You Are a Creditor --- Making a Claim Against the Estate Yourself
Disposing of Lawfully Presented Creditor's Claims
Disposing of Defective Creditor's Claims
Source of Funds for Payment of Creditor's Claims
Petitioning for Contribution from the Beneficiaries
The Issue: Has each creditor given notice of his/her/its claim according to law?
Why Insist on a Lawfully Presented Creditor's Claim for Payment (other than "because it's the law")? Washington law does require that a creditor timely file and serve a Creditor's Claim before the corresponding debt may be paid. Paying a debt before the timely filing and serving of its Creditor's Claim, however, opens a Notice Agent to the possibility of personal liability to the nonprobate estate for the amount of the payment, for example, if:
Bottom-line: Protect yourself, the nonprobate estate and its beneficiaries and creditors by following the statutory Creditor's Claim procedure for the payment of Decedent's debts: Insist upon the proper and timely presentation of a Creditor's Claim before payment.
A. Determining Whether Creditor's Claims Are Lawfully Presented ñ
RCW 11.42.070 provides the requirements for the lawful presentation of a Creditor's Claim:
The Claim must be signed by the creditor or the creditor's
attorney or agent, and
The Claim must contain the following information:
The creditor's name and address.
If made by the creditor's agent, the agent's name and address and the nature of the agent's authority as regards the creditor.
A statement of facts or circumstances surrounding the Claim.
The amount of the Claim.
If the Claim is secured, the nature of the security; if
not yet due, the date when it will become due; and if contingent, the
nature of the uncertainty.
The Claim must be presented within the
Statute of Limitations.
The original of the claimant's Creditor's Claim form must
be filed with the Court.
A copy of the claimant's Creditor's Claim form must be served or mailed (by first-class mail) to you.
Side-bar: Are All Claims Subject to the Creditor's Claim Procedure?
|The Issue: As Decedent's Notice Agent, you are entitled to make a claim against the nonprobate estate yourself despite your resulting conflict of interest of having the authority to approve your own claim. The Legislature has resolved this conflict by making your claim inferior to all others, ie, you get "paid last."|
B. Special Circumstance: You Are a Creditor --- Making a Claim Against the Estate Yourself ñ
RCW 11.42.090(3) provides for strict provisions if you are a creditor of Decedent and wish to present a Creditor's Claim against the estate yourself: You cannot pay your Claim unless all other Creditor's Claims filed and all debts having priority to your Claim have been paid in full or satisfactorily compromised, regardless of whether they are allowed or rejected.
This "last in line" order of payment applies not only to any Creditor's Claim you make but also to any made by any other Beneficiary of Decedent's nonprobate estate.
|The Issue: How do you lawfully respond to any creditor who has lawfully given notice of his/her/its Claim?|
C. Disposing of Lawfully Presented Creditor's Claims ñ
Lawfully presented Creditor's Claims may be:
(in whole or in part),
Compromised (ie, by negotiating a settlement with the
(in whole or in part) by notifying the claimant by personal service
or first-class mail to the address stated on the Claim that you
agree that it is valid and lawfully presented,
"Held," by taking no action about it, or
(in whole or in part) by notifying the claimant of the rejection.
Timing (for all actions other than "holding"): Within the later to occur of:
4 months from the date of first
publication of your Nonprobate Notice to Creditors, or
30 days from the date of your receipt of the Creditor's Claim.
|The Issue: Can you lawfully pay a creditor who has not lawfully given notice of his/her/its Claim?|
D. Disposing of Defective Creditor's Claims ñ
RCW 11.42.070(4) provides that if a Creditor's Claim is not lawfully presented (for example, it contains defects such as an omission of one of the statutory requirements, or it is not submitted in writing), then so long as:
The Creditor's Claim was made within the
applicable statute of limitations,
It was made in writing, and
It is due.
You may pay it if:
The estate is solvent,
The amount you propose to pay is the amount
of indebtedness over and above all payments and offsets, and
Your payment is made in good faith (eg, you believe the Claim to be valid --- the other criterion for allowing a Claim).
Bottom-line: If you receive a very modest bill, have no qualms about paying it, and believe that it would not be cost effective to return it and insist on the submission of a proper Creditor's Claim, then you may waive the defects and pay it without subjecting yourself to personal liability.
Caution: You may not lawfully pay any Creditor's Claim that was presented after the expiration of the applicable statute of limitations. RCW 11.42.090(1) By paying a Claim unlawfully, you are subjecting yourself to personal liability to the nonprobate estate and its Beneficiaries for the amount of your payment.
E. Source of Funds for Payment of Creditor's Claims ñ
The only funds that the Notice Agent may use for the payment of a Creditor's Claim are those received as a result of Decedent's death by the Notice Agent or by those appointing the Notice Agent except:
By a written Agreement under
RCW 11.96A.220, or
F. Petitioning for Contribution from the Beneficiaries ñ
A Notice Agent may seek contribution from the Beneficiaries of Decedent's nonprobate assets for their respective pro rata share of the nonprobate estate's claims and expenses. See: Petition to Require Contribution.
You have now completed the steps for dealing with Creditor's Claims in a typical nonprobate estate.
Your author thanks Kris Henderson, a Reference Librarian at the King County Law Library, for suggesting the need for this page.