SENATE BILL REPORT

ESHB 1173

BYHouse Committee on Judiciary (originally sponsored by Representatives Appelwick, Padden, Crane, Tate, P. King, Inslee and Sprenkle)

Revising nonclaim statutes.

House Committe on Judiciary

Senate Committee on Law & Justice

Senate Hearing Date(s):March 16, 1989

Majority Report:  Do pass as amended.

      Signed by Senators Pullen, Chairman; McCaslin, Vice Chairman; Madsen, Newhouse, Niemi, Rasmussen, Talmadge, Thorsness.

Senate Staff:Jon Carlson (786-7459)

                  March 16, 1989

AS REPORTED BY COMMITTEE ON LAW & JUSTICE, MARCH 16, 1989

BACKGROUND:

RCW 11.40.010 requires the personal representative of an estate to notify creditors of the estate.  The notice tells creditors that they must file claims against the estate within four months.  The notice is to be made by publication in a legal newspaper once a week for three weeks.  This notice need not be made in the case of an estate that passes to a surviving spouse.  In Tulsa Professional Collection Services, Inc. v. Pope, the U.S. Supreme Court held that notification by such publication under a similar Oklahoma statute was unconstitutional and that known or reasonably ascertainable creditors must be notified personally by mail.  The court held that probate court involvement amounts to "state action" for purposes of the federal Constitution's due process clause, and that therefore the property interests of a creditor of the deceased must be accorded due process protection.  The court concluded that mere publication of notice does not give enough protection to a creditor.  The court held that personal service by mail, at least, is necessary.

The Supreme Court offered few words on the standard to which a personal representative is to be held in looking for creditors of the deceased.  The court disavowed any intent to require "impracticable and extended searches,"  stating instead that all that the executor or executrix need do is make "reasonably diligent efforts."  The court also indicated that it is reasonable to dispense with actual notice to those with mere "conjectural" claims.

A section of the probate code provides that if a personal representative of an estate has not been appointed within six years after the death of the deceased, then except for liens upon specific items of property, the estate is no longer liable for debts of the deceased.  Another section of law tolls any statute of limitation on a cause of action against a person who dies until one year after the personal representative is appointed.  Various periods of limitation, ranging from ten years to one year, apply to different kinds of lawsuits.

SUMMARY:

This bill makes two major changes in probate law.  First, it requires a personal representative to make reasonable efforts to identify creditors and to give actual notice of claim filing requirements to any known or identified creditors.  Second, it imposes an 18 month period following death during which all claims must be filed whether or not a personal representative is appointed and whether or not notice to creditors is given.

A personal representative of an estate must make personal service of notice to certain creditors in addition to making general publication of notice in a legal newspaper.  The personal representative must give actual notice to any creditor he or she learns of during the four month period in which claims by creditors must be filed.  The notice may be by personal service or by first class mail to the last known address of the creditor.  Creditors who receive actual notice have until the expiration of the four month period or until 30 days after receipt of notice, whichever comes later, to file their claims.

A personal representative must exercise "reasonable diligence" in trying to find creditors during the four month period.  A search for creditors will be presumed reasonable if the personal representative has made a reasonable review of the deceased's correspondence and financial records, and has asked those who may be entitled to part of the estate under a will or by intestacy if they know of any creditors.  The presumption of the reasonableness of such a search may be overcome only by clear, cogent and convincing evidence.

The personal representative must meet these notice requirements with respect to all estates, even those passing to surviving spouses and children.

An 18 month nonclaim provision is added to the probate code.  All claims against an estate, except certain claims involving insurance, must be filed within 18 months of the deceased's death.  However, the 18 month nonclaim period does not apply if no personal representative has been appointed.  It also does not apply to a creditor if the personal representative has not complied with the actual notice requirements of the act and partial performance on the debt has been made during the 18 month period.

SUMMARY OF COMMITTEE AMENDMENT:

The 18 month limitation for claims against an estate does not apply to any claims where no personal representative is appointed within 12 months after the date of death.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 19, 1989

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Michael Carrico, Washington State Bar Association (pro)