The HBO costume drama The Gilded Age immerses viewers in the quickly changing world of late-19th century New York City. An unexpected death revealing unexpected debts in the first episode propels the character Marian Brook into this rarefied world. The Gilded Age also provides a diverting context for discussing how debts are handled under Washington law in the administration of estates without probate (“nonprobate estates”). In my last blog post, I discussed the procedure for providing notice to creditors under RCW 11.42.020. This post discusses what happens when a creditor files a claim in response to a nonprobate notice to creditors.
RCW 11.42.050 sets forth the time limits for a creditor to file a claim against a nonprobate estate. If the notice agent follows the requirements at RCW 11.42.020 for giving notice, a creditor must present its claim within four months after the date of first publication of the nonprobate notice to creditors or be forever barred from filing a claim against a decedent’s assets.
What happens if a creditor files a claim against a nonprobate estate during the applicable time limit? RCW 11.42.080 imposes a duty on a notice agent decide whether to allow or reject all creditor claims presented. It also provides a way for a creditor to petition the court to have a claim allowed if the notice agent fails to accept or reject a claim within a certain time frame. In determining whether to allow or reject a claim, the notice agent should evaluate whether it meets the requirements set forth at RCW 11.42.070, which includes requirements for service, filing, and contents of a valid creditor claim. A claim may be rejected if it fails to meet these procedural requirements, or if the claim itself does not represent a valid debt.
Once a claim has been accepted, it must be paid. Just as a Lannister always pays his debts, a notice agent must always pay the nonprobate estate’s claims – to the extent sufficient assets exist to pay those claims. Under RCW 11.42.085, any assets that would have been subject to a person’s debts if the person was alive are also fair game for claims against their estate, whether or not a probate occurs.
If there is any question as to whether a nonprobate estate has sufficient assets to pay all claims, as was the case for Marian Brook in The Gilded Age, RCW 11.42.090 sets forth the order for paying claims against a nonprobate estate as follows:
Allowance of claims-Notice-Payment order.
(1) If the notice agent allows a claim, the notice agent shall notify the claimant of the allowance by personal service or regular first-class mail to the address stated on the claim. A claim may not be allowed if it is barred by a statute of limitations.
(2) The notice agent shall pay claims allowed in the following order from the assets of the decedent that are subject to the payment of claims as provided in RCW 11.42.085:
(a) Costs of administering the assets subject to the payment of claims, including a reasonable fee to the notice agent, any resident agent for the notice agent, reasonable attorneys’ fees for the attorney for each of them, filing fees, publication costs, mailing costs, and similar costs and fees;
(b) Funeral expenses in a reasonable amount;
(c) Expenses of the last sickness in a reasonable amount;
(d) Wages due for labor performed within sixty days immediately preceding the death of the decedent;
(e) Debts having preference by the laws of the United States;
(f) Taxes, debts, or dues owing to the state;
(g) Judgments rendered against the decedent in the decedent’s lifetime that are liens upon real estate on which executions might have been issued at the time of the death of the decedent and debts secured by mortgages in the order of their priority; and
(h) All other demands against the assets subject to the payment of claims.
(3) The notice agent may not pay a claim of the notice agent or other person who has received property by reason of the decedent’s death unless all other claims that have been filed under this chapter, and all debts having priority to the claim, are paid in full or otherwise settled by agreement, regardless of whether the other claims are allowed or rejected.
In The Gilded Age, Marian’s attorney announces during that first episode that he will waive his fee so that she will have a small sum to inherit after her father’s debts are paid. Without revealing any spoilers, it is fair to say that Marian’s attorney had an ulterior motive for waiving his fees. However, it should be noted that under Washington law, the attorney fees would have been paid before any creditor claims. The costs of administration – including reasonable attorneys’ fees and a reasonable fee for the notice agent – are paid before other creditors. Funeral expenses, expenses of last sickness, and wages owed by the decedent for labor performed in the 60 days prior to death also take precedence over payment of other claims against an estate.
Stay tuned for the next post in this series, which will discuss how a notice agent decides which assets to use to pay the debts of a nonprobate estate.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.