[WSBAPT] Creditor's Options

Wed Aug 31 12:21:34 PDT 2022

Inge, I agree FWIW. If the claim against the decedent is based on an installment contract under which the decedent is making payments, the creditor needs to timely file a creditor claim. Storlie v. Sachse, 165 Wash. 291, 5 P.2d 342 (1931) (collection on promissory note barred by failure to file claim). The PR would then either allow the claim or reject it. Under your hypothetical I think the PR would have to allow it; I don’t see a legal basis for rejecting a timely creditor claim on a debt contract that the decedent had voluntarily entered into. But if the creditor misses the deadline, the potential claim against decedent’s Estate is extinguished. The 2-year bar is not a statute of limitations; it is a statute of nonclaim and actually extinguishes the claim itself as against the Estate (without extinguishing the claim against any other person, or extinguishing any right to foreclose on a security interest such as a mortgage). Cf. Williams v. State, 76 Wn.App. 237, 247, 885 P.2d 845 (Wash. App. 1994).

For community debts based on a contract signed by the decedent spouse only, I think Ruth v. Dight tends to mean that the creditor can’t directly pursue the surviving spouse either. Ruth is based on a tort medical malpractice claim against a deceased doctor, but the logic of the cases still seems to say that all community debts, whether in tort or contract, must be filed as claims in the first spouse’s probate.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Inge Fordham
Sent: Wednesday, August 31, 2022 11:30 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Creditor's Options

As to the original set of facts, I don’t quite follow how the two-year timeline is extended to three years under the set of facts provided.  It sounds like the insurer was receiving payments from the insured under an installment plan (thus, there was presumably no insurance to cover the original tort claim).  Under the circumstances, isn’t the insurer limited to two years?

I have a related question with slightly different facts.  Assume the same facts EXCEPT that probate had been commenced, a PR appointed, Notice to Creditors published, and actual notice was given to the creditor (the insurer to whom the decedent was making payments).  Wouldn’t that creditor be required to present a claim within the latter of 120 days from publication of a notice to creditors or 30 days from the date the PR provided notice to the creditor?

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Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
www.fordhamlegal.com<http://www.fordhamlegal.com>

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From: <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> on behalf of "samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>" <samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>>
Reply-To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Date: Wednesday, August 31, 2022 at 10:49 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Creditor's Options

Thanks, Eric.  Yes, your understanding is exactly right.  Dalynne Singleton chimed in this morning though, citing to RCW 11.40.051<http://app.leg.wa.gov/RCW/default.aspx?cite=11.40.051>(1)(c) for time limits on claims against a decedent (24 months after death where no notice was provided) and RCW 11.40.060<http://app.leg.wa.gov/RCW/default.aspx?cite=11.40.060> for the exception to claims that can be satisfied by applicable insurance coverage.

This is a strange situation though because decedent entered into an agreement to make installments on a liability that would typically be covered by insurance but they were either, (a) uninsured at the time of the accident or (b) the total liability exceeded the policy limits, which is the reason that they would have entered into such an installment agreement.  Under the circumstances, it would appear that the insurer/creditor would have been required to commence probate within 24 months of death in order to pursue the claim.  I am open to any arguments to the contrary though.

Sam

Samuel M. Meyler
Meyler Legal, PLLC
1700 Westlake Ave. N., Ste. 200
Seattle, Washington 98109
Tel:  206.876.7770
Fax:  206.876.7771
Email:  samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Eric Nelsen
Sent: Wednesday, August 31, 2022 9:07 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Creditor's Options

So the decedent’s tort liability has been reduced to a contract that provides for installment payments, is that right? I assume it is simply a contract to make payments and it’s not secured by a deed of trust or anything like that. I will also assume that the debt is a community debt of decedent and spouse. In that case, the creditor would have to get a probate started so they can file a creditor claim. They can be appointed as PR per RCW 11.28.120(6)<https://app.leg.wa.gov/RCW/default.aspx?cite=11.28.120>, or petition to have a 3rd party appointed. They’d have to give notice to the surviving spouse per RCW 11.28.131<https://app.leg.wa.gov/RCW/default.aspx?cite=11.28.131>. Once the probate is commenced, they’d file the creditor claim and get it allowed or rejected, and file suit if it’s rejected.

The creditor cannot pursue the claim directly against the surviving spouse without also filing a claim in the estate. Ruth v. Dight.

The estate of the first spouse to die (Spouse 1) has jurisdiction over all community property and community debts. The death of a spouse terminates the marital relationship and the "marital community." Bank of Montreal v. Buchanan, 32 Wn. 480, 73 P. 482 (1903); see also Washington State Bar Assn. Community Property Deskbook (4th ed. 2014) (hereinafter "CP Deskbook"), Sec. 4.11. At death of Spouse 1, the community "ceases to exist." Sutton v. Hirvonen, 113 Wn.2d 1, 6, 775 P.2d 448 (1989). Spouse 1's estate accordingly has jurisdiction over all community property and community liability, not just the decedent's half, so as to dispose of all community matters. Ruth v. Dight, 75 Wn.2d 660, 670, 453 P.2d 631 (1969) (claim against the community cannot be pursued against surviving spouse if not also properly brought against the deceased spouse's estate); Gilliam v. City of Centralia, 14 Wn.2d 523, 531, 128 P.2d 661 (1942) (deceased spouse's personal representative, not the surviving spouse, has authority to pursue a community claim); Magee v. Big Bend Land Co., 51 Wash. 406, 408, 99 P. 16 (1909) (administration of first spouse's estate had jurisdiction and authority to sell the entire community real property). See also CP Deskbook, Sec. 4.13.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>
Sent: Tuesday, August 30, 2022 6:07 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Creditor's Options

Listmates,

Here is the scenario: Decedent causes a car accident in 2016, admits fault and enters into an agreement with the other/injured party’s insurer to make payments over time.  Decedent passes away on 8/17/2020.  Decedent was married and wife continues to live in the family home which has equity in it.  Probate was never opened.  What options does the insurer have to pursue collection of the outstanding balance?  What procedures would the insurer have to follow?  Thanks for your input.

Samuel M. Meyler
Meyler Legal, PLLC
1700 Westlake Ave. N., Ste. 200
Seattle, Washington 98109
Tel:  206.876.7770
Fax:  206.876.7771
Email:  samuel at meylerlegal.com<mailto:samuel at meylerlegal.com>

NOTICE:

This electronic message contains information which may be Confidential or Privileged and constitutes an electronic communication within the meaning of the Electronic Communications Privacy Act 18 USC 2510. The information is intended to be for the use of the individual or entity named above.  If you are not the intended recipient, please be aware that any disclosure, copying, distribution or use of the contents of this information is prohibited.  If you received this transmission in error, please notify the sender and delete the copy you received together with any attachments.  Thank you.

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