Estates: Claims of Creditors
Chapter 329 of the Acts of 1989 changed certain statutes of limitations as regards the claims of creditors against an estate, that's true. The various limitations, which theretofore were measured from the time of the giving of the fiduciary's bond, were recalculated from the date of the decedent's death. The changes, however, related to the presentation of claims to and actions against the fiduciary and actions in certain personal injury cases. See, for example, G.L.c. 197, §§ 9, 9A. The new statute was in response to Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 99 L.Ed2d 565, 108 S. Ct. 1340 (1988) which had declared unconstitutional an Oklahoma statute similar to G.L.c. 202, §20. Belknap, Newhall's Settlement of Estates and Fiduciary Law in Massachusetts, Lawyers Cooperative Publishing Company (Fifth Edition, 1994), §17.11 says this:
The statute [G.L.c. 197, §9] was amended in 1989 to comport with a United States Supreme Court case. [Footnote omitted.] That case held that an Oklahoma statute of limitations on creditors' claims was unconstitutional if actual notice was not given to creditors "known and reasonably ascertainable" because the statute involved state action in that it was not self-executing. At that time the Massachusetts statute, which ran from the date of appointment of the fiduciary, also arguably involved state action. [Footnote omitted.] Thus, it was amended [footnote omitted] to eliminate the prior two-track system for creditor's claims and collapse the procedure into a single one-year limitation running from the date of the decedent's death.
What does G.L.c. 197, §9 say? It provides as follows:
(a) Except as provided in this chapter, an executor or administrator shall not be held to answer to an action by a creditor of the deceased unless such action is commenced within one year after the date of death of the deceased and unless, before the expiration of such period, the process in such action has been served by delivery in hand upon such executor or administrator or service thereof accepted by him or a notice stating the name of the estate, the name and address of the creditor, the amount of the claim and the court in which the action has been brought has been filed in the proper registry of probate.
(b) An executor or administrator shall not be held to answer to an action by a creditor of the deceased which is commenced within any other or additional period of limitation for bringing such action provided by or under this chapter unless before the expiration of such period the process in such action has been served by delivery in hand upon him or service thereof accepted by him or a notice as aforesaid has been filed in the proper registry of probate.
(c) A trustee of a trust, the assets of which are subject as a matter of substantive law to being reached by creditors of the deceased, shall not be held to answer to an action by a creditor of the deceased unless such action is commenced against such trustee or against the executor or administrator of the estate of the deceased within the time and in the manner provided in subsection (a). Such trustee shall have immunity from personal liability to a creditor of the deceased in the same manner as an executor or administrator has, pursuant to sections two, three, four, and five.
(d) If a deceased received medical assistance under chapter 118E when such deceased was 55 years of age or older or while an inpatient in a nursing facility or other medical institution, section 32 of chapter 118E shall govern the notice to be given to the division of medical assistance and such division's claim for recovery under section 31 of said chapter 118E if the division so chooses.
Paragraph (a) is the "meat" of the statute. It essentially states that a creditor must do two things in order to effectively make a claim against the estate and thereby make the assets of the estate subject to the payment of the claim. The first thing the creditor must do is bring an action in a court of law pursuing the claim. The second thing is for the creditor within the same year to either (1) file a claim in the estate stating where the action is pending or (2) serve the executor or administrator in hand.
If we see a notice filed in the estate it's easy to track down the specifics of the claim (the pending lawsuit), but what happens if the action has been brought in court with no notice filed in the estate (but only service in hand): how would we know the claim is pending? The answer to that puzzle is found in G.L.c. 202, §20, that provides:
No interest in the real estate of a deceased person conveyed absolutely or in mortgage for value and in good faith by an instrument duly recorded shall be liable to be taken on execution, or sold under any judicial proceeding for payment of his debts, costs of court, or claims against his estate, except claims for taxes, municipal assessments or succession taxes, legacies or other charges created by will of the deceased, or the expenses or charges of administration, after the expiration of one year from the time of the first appointed executor or administrator first giving bond for the performance of his trust, unless in pursuance of a license to sell granted in consequence of an order for the retention of assets passed under the provisions of section thirteen of chapter one hundred and ninety-seven upon a petition filed within said year or before said conveyance or mortgage is recorded, or unless in pursuance of a license to sell granted upon a petition filed in the registry of probate within said year, or unless for the satisfaction in whole or in part of a claim of which notice has been filed in the registry of probate within said year, stating substantially the name and address of the claimant, the nature and amount of the claim and the court, if any, in which proceedings are pending to determine or enforce the same. Said notice shall be filed with the other proceedings in the case and entered upon the docket under the name of the estate of the deceased.
As you can see, when it comes to real estate this statute imposes a limitation on its sale to pay for filed claims and provides that no such sale shall be allowed where there has been a sale or mortgage of the property by an heir or devisee except under a license filed within one year from the time of the fiduciary's bond. This statute is governed by the one-year-from-bond period while §9 is governed by the one-year-from-death period. Although the statutes are at variance in this respect the practical effect is the same because the fiduciary can apply for a license during the first year of the administration.
Notwithstanding the foregoing, G.L.c. 202, §20A, which addresses the sale of property on petition of a creditor for a license to sell the same for claims not against the decedent, but generated by the estate itself, was not affected by the 1989 legislation, and remains as previously enacted. Section 20A, which runs from the time of the giving of the bond, provides for a six year period in relation to costs of administration of the estate.
So, although there have been some changes in the statutes the practice has really remained the same: unless final accounts are filed in connection with costs of administration and unless one year has expired from the giving of the bond in connection with debts and claims against the estate, appropriate exceptions must be taken. (If the executor is giving the deed, this would ordinarily obviate the necessity of the passing of a year, if the fiduciary were properly entrusted with a power and was selling for a fair price.)