Recent Ruling Affects Claims Against Decedents
When a person passes away, the statute of limitations for all claims against the decedent begins to run immediately—even when claimants are not given notice. In Ader v. Estate of Felger, 739 Ariz. Adv. Rep. 26 (Ariz. App. May 27, 2016), the court affirmed summary judgment for a defendant where the defendant had died more than two years before the plaintiff filed the lawsuit against the defendant’s estate and spouse.
The plaintiff sued for breach of contract, breach of fiduciary duty, fraudulent concealment, negligent misrepresentation, conversion, and racketeering. The trial court granted the defendants’ motion for summary judgment on the ground that the claims arose before death and were therefore time-barred.
Under A.R.S. § 14-3803(A):
All claims against a decedent’s estate that arose before the death of the decedent, including claims of the state and any of its political subdivisions, whether due or to become due, absolute or contingent, liquidated or unliquidated, founded on contract, tort or other legal basis, if not barred earlier by any other statute of limitations or nonclaim statute, are barred against the estate, the personal representative and the heirs and devisees of the decedent, unless presented within the earlier of either:
1. Two years after the decedent’s death plus the time remaining in the period commenced by an actual or published notice pursuant to section 14-3801, subsection A or B.
2. The time prescribed by section 14-3801, subsection B for creditors who are given actual notice and within the time prescribed in section 14-3801, subsection A for all creditors barred by publication.
Claims against an estate cannot be presented until a personal representative has been appointed. In Ader, no probate was opened, no personal representative was appointed, and the estate’s creditors did not receive notice.
Although a personal representative could have been appointed more than two years after the decedent’s death, the personal representative would only be able to settle claims for “expenses of administration.” See A.R.S. § 14-3108(4). The plaintiff’s claims for damages did not qualify as expenses of administration, so the plaintiff’s claims could not be presented against the estate.
Because claims against an estate cannot be presented until a personal representative has been appointed, creditors must initiate probate proceedings when none are forthcoming. If a personal representative is not appointed within two years of the decedent’s death, most claims cannot be presented against the estate. As the Ader court observed, this rule “puts the burden on a creditor to keep informed of the status of a debtor and to promptly pursue his or her claims if the debtor dies.”
If a creditor hears a rumor of a borrower’s death, the creditor must act. Creditors with claims against a decedent must identify the date of death as the opening of a two-year statute of limitations. If you have questions about this new development or related issues, please contact your litigation counsel at Lewis Roca Rothgerber Christie.