Claims Against Estates in Ohio
No matter how much money you have when you are alive, it is nearly impossible to die without some debt. The current month’s mortgage and utilities, car payments, credit card bills, and, of course, the expenses of your last illness, especially if you die in a hospital. But just because a person has a debt when they die does not mean that that debt survives them. In most cases, a creditor has to do something to keep that debt alive after the debtor has shuffled off this mortal coil. Here’s what you need to know about claims against estates in Ohio.
As a general rule, in order for a debt to remain valid after the person who incurred it dies, the creditor must present a claim on the debt to the personal representative of the estate within six months after the deceased person (decedent) died. The Ohio Revised Code specifies that “no payment shall be made...and no action shall be maintained” on a claim presented outside this period.
Now, does six months really mean six months? What if, say, the last day of the six month period falls on Christmas, or even on a Saturday? Is the claims period extended until the next business day? Ohio courts have answered this question with an emphatic “no.” With regard to claims against estates in Ohio, six months means six months.
How Are Claims Against Ohio Estates Made?
So long as a fiduciary (like an executor or administrator) has been appointed and the estate is still open, a creditor has three options for presenting a claim. He or she can do so:
- To the administrator or executor of the estate in a writing;
- To the administrator or executor of the estate in a writing and to the probate court by filing a copy of the writing with the court; or
- In a writing that is sent by ordinary mail addressed to the deceased debtor and that is actually received by the administrator or executor within the appropriate time. (This option addresses those regular monthly bills required above, which might be too small to financially justify presenting a formal claim against the estate).
Courts have construed rules about presentment of claims quite strictly. Writings presented must be presented to a fiduciary who has actually been approved by the court. If presented to someone else, even if that person ultimately gives it to the fiduciary, that is not enough to make the claim valid. Fiduciaries may only pay claims that have been validly presented; otherwise, they could be held personally liable for amounts wrongly paid out.
Six Months is Six Months, Except When It’s Not
If a fiduciary really wants to resolve an estate quickly, there are steps he or she can take to shorten the six-month claim period to just 30 days. All the fiduciary needs to do is send a writing to the creditor that identifies the decedent by name, states their date of death, gives the name and address of the fiduciary, and tells the creditor that any claims must be presented to the fiduciary in a writing “within the earlier of thirty days of receipt of the notice...or six months of the death of the recipient.” As long as this written notice complies with Ohio Revised Code 2117.07, a creditor’s claim would be barred on day thirty-one, even if otherwise well within the six-month period.
Now, what if you are named in your father’s will as executor of his estate, and you want to eliminate some of the estate’s debt? Could you wait until seven months after your father dies to open the estate? If you could, then wouldn’t claims against the estate be defeated, because they would necessarily be made more than six months after your father’s death? Not necessarily. In Ohio, a creditor can petition to open the estate as a “special administrator,” and claims timely presented to a special administrator are considered valid. In other words, if you don’t open the estate, someone else may do it for you, and may even be permitted to sell assets to pay claims. (You may later be appointed as the “real” administrator.)
Payment of Claims Against Estates in Ohio
Once a fiduciary has received a claim against the estate, he or she is supposed to allow or reject it within 30 days. There is, however, no penalty for failing to do so. If a claim is rejected, the creditor has two months within which to bring an action to enforce the claim. The probate court will not allow the probate matter to be closed until the fiduciary has either rejected or allowed any claim of which a copy has been filed with the probate court.
Claims against a probate estate must be paid according to priority. If there are more claims against the estate than there are assets in the estate to satisfy them, the estate is insolvent. The probate court will then place each claim in a class according to its priority and give approval, or lack of approval, for payment of claims in each class.
There are some claims against the estate that are exempt from the six-month period, presentment requirements, or both. These include the expenses of estate administration (exempt from both); allowance for support of the surviving spouse and minor children (exempt from presentment requirement); taxes (exempt from presentment requirement); secured debts (exempt from six-month rule); Medicaid debts (given a longer claim period than the six-month period); and contingent claims that depend on something happening after the death of the decedent, like a default on a loan. Contingent claims must be presented before the later of either six months from the death of the decedent, or “two months after the cause of action accrues.”
If you have questions about making a claim against an estate, or are a fiduciary wondering how to handle claims against an estate you are administering, contact an experienced Ohio probate attorney.