Claims of Creditors

The answer depends on the type of claim and the “pot” of assets from which the creditor or injured party is seeking funds for payment.  The categories of claims are:

• An unsecured claim (e.g. a claim for money owed on an account, a note, because of an injury, for reimbursement of the funeral expenses) if payment is being requested from general estate assets must be presented for payment within 6 months of the date of the decedent’s death.  The 6 month timeline begins with death, not when the estate is opened or when an executor or administrator is appointed.
• Secured claims (mortgage on real estate, lien on vehicle, pledge of securities) do not need to be presented for payment, to the extent that payment is only being sought from the asset providing the security.  If there is a possibility that the asset providing the security will not fully satisfy the debt, then the claim for the deficiency must be presented within the 6 month window following the death.
• Claims only against the decedent’s liability insurance for injuries caused by another (tort claims, i.e. injuries from auto accident, assault, intentional acts) in which recovery is being sought only from the insurance are not bound by the 6 month timeline; however, if recovery beyond the insurance coverage is sought from the decedent’s general estate assets, then the claims must be submitted within the 6 month window.
• Medicaid Recovery Claims may be submitted for a period ending on the later of one year after the decedent’s death or 90 days after the filing of the Medicaid Recovery reporting form (Form 7.0) with the Medicaid Recovery Administrator. This special claims filing window makes the state Medicaid program a super-creditor.

An Executor or Administrator having a claim against the estate in which the appointment is made should disclose the existence of the claim on the initial application for appointment.  To preserve the claim, the executor/administrator must file a claim with the Court within 3 months of the appointment.  If the claim is for more than $500, the Court will set the claim for an evidentiary hearing not less than 4 weeks, nor more than 6 weeks, after the filing.  The Court may appoint a special master commissioner to investigate the validity of the claim, or may appoint an attorney to represent the estate at the hearing.  The fiduciary must notify all those persons or entities inheriting from the estate at least 20 days prior to the hearing by giving them notice of the date, time, location and purpose of the hearing.  The interested parties may, in writing, waive the notice and may consent to the approval of the claim.

All other creditors must present their claims in one of the following ways after the opening of an estate and the appointment of the estate fiduciary (but before the filing of the final account):

1. To the executor or administrator in writing;
2. To the executor or administrator in writing, and to the probate court by filing with it a copy of the written claim that has been filed with the fiduciary, or
3. By sending a written claim by ordinary mail addressed to the decedent if it is actually received by the fiduciary within 6 months of the date of death.

If the final account has already been filed and the claim is not time-barred, then a claim is made by presenting the claim in writing to the persons or entities who received distributions of estate assets from which the claim properly would have been paid if the assets had not been distributed.

Claims not timely presented are forever barred by Ohio law as to all parties, including the estate beneficiaries, unless the beneficiary is otherwise obligated on the debt (e.g., a co-debtor).

If a creditor concludes that the size and probability of collection of the claim justifies the effort and expense, the creditor can apply to the Probate Court for the appointment of a special administrator for the estate who serves only until the general estate fiduciary is appointed.  If the application and appointment occur within the 6 month post-death window and the claim is timely filed with the special administrator before the claims barr date, the claim will be timely presented.  The creditor should apply to the court sufficiently far in advance of the 6 month deadline to allow the Court time for processing the application for a special administrator and allow the claimant adequate time thereafter for the claim to be presented.

The fiduciary may accelerate the closing of the claims filing window by giving a written notice to the claimant containing specific identifying information and advising the creditor that the claim must be presented within the earlier of 30 days after the notice is received, or 6 months after the death.

There is no fee charged by a fiduciary for a claim presented to the fiduciary.  There is a nominal $10.00 charge by the Probate Court for filing and docketing a claim filed with the Court and included in the estate case file.  The court’s filing fee must be tendered with the filing or the proffered filing will be rejected.

The estate fiduciary may allow a particular claim, or reject it by giving written notice of the rejection to the claimant of all or part of the claim.  If rejected, the claimant has 2 months from the date the notice of rejection is received in which to commence suit on the claim by filing a lawsuit on the claim in a court having general jurisdiction to determine the validity of the claim.  The claims barr statute (RC 2117.12) recites that for purposes of this code section “Commencement” means the filing of both “the complaint and a praecipe for service of summons” on the estate fiduciary.  The lawsuit on the general validity of the claim is not within the jurisdiction of the probate court.

A claim that is otherwise valid, but not timely presented must be rejected by the estate fiduciary as current Ohio case law holds that there is no authority for the fiduciary to pay barred claims.  The fiduciary may be held personally responsible for improperly paying untimely claims.

The payment of allowed claims depends on the estate being solvent, and also upon the relative priority given the claims of the type that the claim represents.  It is therefore important that the written claim clearly indicate whether the claimant is alleging that the claim is one of the claims having a statutory priority for payment ahead of general unsecured.  The type of priority claims listed in descending order of priority for payment are loosely described as:

Costs of administration, certain expenses of funeral and burial within certain dollar limits, the $40,000 family allowance for the spouse/minor children, debts given priority under federal laws (taxes), expenses of the decedent’s last illness, claims under the state Medicaid Recovery program, and state and local taxes, debts for manual labor and service performed for the decedent within 1 year prior to the death, not exceeding $300 per laborer.  Other claims are considered general claims and have the lowest priority of claims, but such claims are still ahead of distributions to the estate’s heirs.

These are only general categories and claimants are cautioned to give consideration to the specific statutory language governing the order and priority of claims (RC 2117.25).

Debts of a decedent do not pass to the decedent’s heirs, except to the extent that the debts are secured by assets the heir inherits and the debt is not paid in the estate.  An heir may become responsible for the payment of debts of the decedent to the extent that a distribution has been made to the heir by the estate fiduciary and insufficient assets remain in the estate to fully pay the valid debts.  In that case, the heir is responsible for payment of the debt, but never for an amount greater than the amount of the distribution and never for a greater share of the claim than the ratio that the distribution received was to the total of the distributions to all beneficiaries of the same priority class.

Only to the extent of the payment and to the extent that the claim has been or will be timely presented to the estate and is not barred by a valid rejection.  The person paying the claim should consider obtaining a written assignment of the claim from the creditor receiving the payment and if the claim has not already been filed make a timely filing.

General executions (forcible collections, seizures, judgment liens) may not be issued against an executor or administrator without approval of the Probate Court, and then only against the undistributed assets held in the estate.  Pre-death secured creditors may enforce their liens against the estate asset providing the security without filing a claim or obtaining Court approval, unless the estate fiduciary has already commenced an action to sell the asset in the Probate Court.

The benefit of good legal advice can be critically important to a person intending to file a claim.  It is critical to assure timely presentation, proper documentation, and clear identification of the priority claimed.  It can enhance the prospects for payment.  A claimant is not required to have an attorney.  Ohio law prohibits the Court’s staff from providing legal advice to a claimant or preparing a creditor’s claim.