When someone dies, certain required documents must be filed with Maryland’s Orphan Court. The Register of Wills then issues what is known as Letters of Administration. This establishes the validity of the decedent’s will (if one exists and is filed with the Register of Wills) and appoints the personal representative. Starting on the date the Letters of Administration are issued, there are set deadlines that the personal representative must meet in managing the estate.
The personal representative has a duty to make reasonable efforts to find out if the decedent died with outstanding debts. Notice of the death and pending estate administration must be given to all potential claimants. The notice that is given to creditors is published in a paper by the Register. The personal representative is not required to contact every creditor individually; the official publication serves as their notice. The only creditors the personal representative needs to contact are the secured creditors. If the unsecured creditors fail to file a claim within 6 months of the date of death, they are barred from collecting the debt.
What types of claims are considered valid?
Estate claims range from many different types of debts – mortgages, credit card debt, loans, unpaid wages and breach of contract claims. If the claims are marked as valid by the Orphan’s Court, then the personal representative must pay them using the assets from the estate prior to making any distributions to named beneficiaries. There is a strict priority of how these claims should be paid.
If the personal representative disagrees with a claim, a counter filing (Form RW1129 Notice of Disallowance) should be submitted where you require the Claimant to petition the court and have the claim reviewed by the Orphans Court Judge.
Valid claims include:
- Funeral and burial expenses
- Surviving Spouse’s Benefits
- Taxes
- Reasonable and necessary medical and hospital expenses of the decedent’s last illness
- Secured debts
- Unsecured debts
Claims must be made by a written, timely filing. Missing the deadline bars the claim from being paid by the personal representative. A personal representative must check and validate all claims were timely filed.
A claim can be accepted and prioritized to be paid, rejected in whole or rejected in part. The notice of rejection should be sent by certified mail to the creditor. The creditor then has a period of time to petition the court to review the personal representative’s rejection and determine whether the claim should be accepted.
The creditor and personal representative also have the option to negotiate and settle a claim. All settlements must be approved by the court.
If the decedent’s estate does not have sufficient liquidity to pay all valid claims, then the personal representative may be forced to convert other types of assets into cash to pay the claims. It is also possible to petition the court to bring non-probate assets such as real estate back into the probate estate for the purpose of settling valid claims.
This can be a very complex matter. Knowing how to validate claims and understanding the priority of which claims to pay in the appropriate order may require the assistance of an experienced estate administration attorney. For more information on estate administration, probating a will in Maryland and verifying claims against an estate, contact the attorneys at Stouffer Legal in the Greater Baltimore area for a consultation. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.
