One of the main purposes for probate laws is to provide a means, a procedure, for creditors to be paid, to the extent there are assets, from the estate of deceased obligors. In fact, the legislation was amended not too long ago to include “creditors” into the definition of persons qualified to apply for the application to probate a decedent’s estate. Today, a creditor has the legal standing to file an Application to administer an estate that owes the creditor money. This is a powerful tool for the creditor.
The general statute of limitations for a debt is four years. When an obligor (person who owes someone money) passes away, the general statute of limitations, in Texas, does not change; the limitations period, generally, again this is four years, continues to run. For example, if Jeff owes his cable company $500.00 on 1-1-2010 and passes away on 1-2-2010, the cable company only has until 1-3-2014 to collect this $500.00 from Jeff or his estate. However, Texas law also does provide additional protections for creditors in that the statute of limitations is tolled (i.e. temporarily stopped) for one year or until the appointment of a personal representative, whichever is sooner. In our example above, if we assume that a personal representative for Jeff’s estate is appointed on 6-2-2010, cable company actually has until 6-3-2014 to collect its $500.00 from Jeff’s estate. Therefore, a creditor, depending on when the debt accrued and when a personal representative is appointed, could have five years to collect its debt from the estate of a deceased obligor.
However, Texas probate laws are quite different for creditors with indebtedness claims in Independent Administrations versus Dependent Administrations. For example, the Texas Estates Code provides a strict presentment of claims process in Dependent Administrations, but the same strict rules of form and procedure do not apply in the present of claims in an Independent Administration. Great caution is advised here to creditors attempting to navigate the claims arena without a qualified probate lawyer. The structure and form of the probate laws for creditor claims can be somewhat of a lesson in game theory. The laws provide for strict adherence to the form of presented claims, specific language must be used, the requirement for filing of suit against a rejected claim, which can happen either expressly or impliedly, must occur within a specific period of time or else the claim becomes barred by law, etc. In addition, the Texas probate laws provide for permissive direct notice to creditors of their needing to formally or informally present their respective claim(s) to the personal representative within 120 days or their respective claim(s) is/are legally barred – as in, even if the personal representative paid you after the creditor’s claim was barred, the personally representative is liable to the beneficiaries for paying this “barred” claim (though, you, as the creditor, may be ok - the point is, the personal representative is not going to pay you, the creditor, when it will be liable to the beneficiaries).
The long and short of creditor rights in probate is that creditors have substantial rights in probate, but creditors also have to known their rights and navigate the claims procedures correctly or risk your claim legally being denied.
Marold Law Firm, San Antonio Probate Attorneys .com, represents creditors in the Texas probate process and we would be glad to sit down with you and discuss how we can assist in your claim against a Texas estate.
Call or email us today to schedule your free consultation with a Probate Lawyer. We look forward to hearing from you!
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Creditors Rights in Probate