Generally, a creditor of someone who has died (the “decedent”) has one year to file a claim against the decedent’s estate. The law in this area has changed a bit over the years and at various times the statute of limitations for creditors’ claims depended upon the date of appointment of an Executor or Administrator for the decedent’s estate. But under the Massachusetts Uniform Probate Code (“MUPC”), this is no longer the case. Rather, the one-year statute of limitations period runs from the date of death. The purpose of the law is to promote the quick settlement of estates by enabling Personal Representatives to pay claims and make distributions after one year without fear of liability from late creditors.
Creditors must ensure thorough compliance with the law in filing their claims. It is not simply enough to give notice of the claim to the Personal Representative, or to just file a Notice of Claim in the probate court. Rather, MUPC § 3-803(a) provides that, before the one-year period expires, the creditor must bring an action against the Personal Representative in the appropriate court, serve the Personal Representative with process by delivery in hand, and file with the register of probate a Notice of Claim stating the creditor’s information and the amount of the claim.
Because the one-year statute of limitations automatically runs from the date of death, it may happen that the decedent’s estate is not probated, and no Personal Representative appointed, until after the expiration of the limitations period, thereby barring a creditor’s claim. Moreover, even if a Personal Representative is appointed within one year, a creditor simply may not receive timely notice of the decedent’s death. To mitigate the harshness of this rule, MUPC § 3-803(e) provides a possible exception. Under that provision, a creditor can file a “complaint in equity” in the Supreme Judicial Court for permission to file a late claim. The creditor must show (1) that “justice and equity require filing of the claim, and (2) that such creditor is “not chargeable with culpable neglect” in not prosecuting his claim within the one-year statute of limitations.
To meet the “justice and equity” element of the test, the creditor must show that (a) his claim is meritorious, and (b) the estate has not shown prejudice. To meet the second element of the test, a creditor must show that his failure to file suit within the one-year limitations period was not due to his carelessness or to any lack of diligence for which he might be properly censured or blamed. In Hastoupis v. Gargas, 9 Mass. App. Ct. 29, 33 (1980), the Massachusetts Appeals Court further explained the culpable neglect standard:
“If the attorney’s failure was inadvertence, misunderstanding, illness or some cause other than neglect or breach of duty, that misstep is not culpable under the statute, nor attributable to the client creditor. The statute thus leaves to the judge some leeway to pardon those errors which arise from a misunderstanding of the controlling law as distinguished from mere procrastination in callous disregard of professional responsibilities.”
Clearly, then, under these standards, whether a late creditor’s claim will be allowed depends upon the facts and circumstance of each case.
Creditors should note that, under the MUPC, they are interested persons with standing to probate a debtor’s estate. Thus, if the expiration of the one-year limitations period is fast approaching and no petition to appoint a Personal Representative has been filed, a creditor should take it upon him or herself to seek appointment of some suitable person. The legal costs and expenses incurred by the creditor in probating the debtor’s estate should be reimbursed upon appointment as legitimate administration expenses.