Claims against the estate affect your estate plan. It is important to be sure that if you have a claim against a decedent’s estate that you file it in a timely manner. If you are creating an estate plan, it is in your heirs’ best interests that you create a plan that deals with many of the usual claims against a decedent’s estate.
1. What is a claim against the estate?
In simple terms, a claim against the estate is a claim made by a person or entity against a decedent’s estate for money or property due to that person or entity. Claims can arise before, at or after the death of a decedent or at the appointment of a conservator for the estate.
Claims can very quickly become involved and intricate. For example, if a decedent had a trust that was revocable upon the decedent’s death and the probate estate is insufficient to satisfy claims made against the estate, then the trust is liable for many types of claims.
2. What types of claims can be made?
Many types of claims may be made against the estate. There are differentiations between the many claims. There can be claims that arise before the decedent’s death; for example, the decedent made a purchase but had not fully paid the amount due. There can be claims that arise after the decedent’s death; for example, a person may argue that the decedent fully intended to bequeath property to him. Funeral and burial expenses may also be claims against the estate. Homestead and family allowance claims may be made. Certain taxes, debts, and contract or tort claims are also likely to arise.
Claims for administrative expenses on behalf of the fiduciary, as well as attorney fees, may also be made; these are subject to the probate court’s review.
3. What are the time limits on filing claims against the estate?
The statute of limitations varies from state to state. In Michigan, the time limit depends on who the claimant is. In general, a claim may be made within four (4) months of publication of notice of the decedent’s death. This limit may be extended up to three (3) years for claims where the statutory requirements of notice have not been met.
It is the responsibility of the estate’s fiduciary to notify creditors. There are statutes and court rules in place that explain how and when a creditor must present his claim against the estate. Failure to present a claim in a timely manner will bar a claim. The only way a claim can be brought after the statute of limitations has run is if the untimeliness of the claim is due to fraud, misrepresentation or fraudulent concealment on the part of the fiduciary.
A claimant may follow the statutory and court rules or alternately may present their claim in a proceeding for payment. Such a proceeding is held in the probate court that has jurisdiction over the decedent’s estate. No proceeding on a claim may be brought until a representative for the decedent’s estate has been appointed. The exception is for proceedings brought by a secured creditor in order to enforce that creditor’s right to the security.
4. How are claims paid?
In Michigan, the Estates and Protected Individuals Code [EPIC] sets out the priority for payment of claims against the estate. They are as follows:
- Administrative expenses as well as reasonable funeral and burial expenses
- Various statutory allowances for the decedent’s family
- Debts and taxes with priority under federal law (this includes Medicaid payments that are subject to recovery); expenses that arose from the decedent’s last illness; debts and taxes with priority under Michigan law
- All other claims
In order to have your estate dispersed as you’d like, it is to your benefit to work with your attorney to create an estate plan that will deal with many of the usual claims against the estate. If you feel that you were not afforded your due in the dispersal of an estate, it is equally important that you file your claim in a timely manner.