Supreme Court of Ohio Clarifies Estate Creditor Obligations

Supreme Court of Ohio Clarifies Estate Creditor Obligations

Creditors must be vigilant to present valid and timely estate claims or risk forever waiving their rights.  On April 19, 2017, the Supreme Court of Ohio upheld the language of Section 2117.06(A) of the Ohio Revised Code in reversing the Eighth District Court of Appeals’ decision in favor of a creditor against an estate.  Wilson v. Lawrence, 2017-Ohio-1410.

Pursuant to R.C. 2117.06(A):

All creditors having claims against an estate, including claims arising out of contract, out of tort, on cognovits notes, or on judgments, whether due or not due, secured or unsecured, liquidated or unliquidated, shall present their claims, within six (6) months of the date of death, in one of the following manners:

  • After appointment of an executor or administrator and prior to the filing of a final account or a certificate of termination, in one of the following manners:
  • To the executor or administrator in writing

In Wilson, a creditor of an estate sent estate claim letters to the decedent’s personal secretary and trustee of his trust, which were forwarded onto the estate executor and attorney within the six-month claim window.  In theory, the creditor’s letters put the appropriate people on notice within the time prescribed by Ohio law.

The trial court, interpreting R.C. 2117.06(A) literally, granted summary judgment in the estate’s favor as the creditor’s claim was not served directly on the estate executor within the six-month claim window.  The Eighth District Court of Appeals reversed, interpreting R.C. 2117.06(A) to allow timely and valid claims when “other individuals connected with the estate receive the claim” instead of the executor.

In the spirit of Dr. Suess, the Supreme Court of Ohio essentially found the Ohio General Assembly meant what it said and said what it meant in enacting R.C. 2117.06(A).  “The language unambiguously states that all creditors shall present their claims in writing to the executor or administrator,” and “[s]hall means must. . . “ and “the word ‘must’ is mandatory.  It creates an obligation.”

According to Wilson, the following must occur in order for a creditor to make a valid and timely claim against an estate.

  1. An estate must be opened and an executor/administrator appointed within six (6) months of the date of death.
  2. A creditor must directly present the appointed executor/administrator an estate claim within six (6) months of the date of death.

The law, as written, favors estates.  There is no obligation an estate must be opened within six months of a decedent’s death.  A creditor, unaware of a debtor’s death, may be left holding the bag if an estate executor/administrator is not appointed within six months of a creditor’s death.  Individuals intending to open an estate and aware of creditor claims can simply sit back and wait for the six-month claim deadline to pass, and effectively eliminate some creditor claims.

Creditors must remain vigilant, educated and nimble in order to preserve estate claims.  Many times, efforts must be made to involuntary open estates to preserve creditor claims.  Spending money to preserve a claim is often more advantageous than forever losing the ability to assert a claim.

The Supreme Court of Ohio’s holding in Wilson is yet another example of the hurdles creditors face in preserving estate claims.  Contact us with questions about your estate claim.

 

 

By | 2017-05-23T20:22:46+00:00 May 23rd, 2017|Collections|0 Comments