I was recently asked to address someone’s claims against an estate. There were several procedural issues I addressed and pass along to you, as well as some practical advice regarding the nature of this person’s claims.
People create living trusts as part of the estate plan in order to avoid the death probate process which can be both time-consuming and expensive. If there is a trust involved, you can present your claim to the trustee, and it can be in any format which communicates the nature and amount of the claim so the trustee can determine its validity. Anyone acting as a trustee would be foolish not to address a creditor’s claim, because if the trustee were to distribute the trust assets and not have resolved the creditor’s claim, the trustee as well as the persons to whom the assets were distributed would become liable for the debt.
If a probate proceedings is started (Wills are implemented through a formal court proceedings known as a probate proceedings), the personal representative of the estate is required to give formal notice to all persons whom they reasonably believe may have a creditor claim The notice is statutory and includes disclosure of the need to file a formal claim with the court/personal representative. The notice also advises that the creditor has four months in which to file a claim or otherwise be precluded from prosecuting their claim. Once a claim is filed, the representative has an obligation to approve the claim, reject it, or approve in part and reject in part. If the personal representative takes no action on the claim within 30 days of it being filed, it can be deemed rejected by the creditor. The creditor is permitted to file suit on the claim once it is rejected in whole or in part, or deemed rejected for failure of the representative to take action.
In this instance, I was advising “Lucy” regarding the nature of her claim for “live-in care” she provided for her foster mother who recently passed away. The question I posed to Lucy was whether or not there was a verbal, written or implied contract that Lucy would provide the live-in care and would be compensated for providing that care? I advised her that absent such a contract, Lucy probably had no “right” to compensation from her foster mother’s estate because Lucy acted as a volunteer.
Out of pocket expenses for food and home repairs might be reimbursable if providing those things were not a gift on Lucy’s part. Gifts are not reimbursable from an estate.
Lucy also incurred moving expenses to move in and provide the live-in care and getting reimbursed from the estate for those moving expenses was problematic. Was there a promise to pay for relocation costs? Was it ever discussed? When Lucy moved in, was it for the convenience of her foster mother, or Lucy? Did Lucy’s foster mother pay the costs of the initial move into the home or did Lucy?
The issues pertaining to probate, creditor claims, and trust administration can be complex and hard to navigate. A certified legal specialist in Estate Planning, Trust and Probate Law can be a key advocate to help you.
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