Vol. 4, No. 1, Pg. 22. Creditors' Rights in Decedents' Estates.

• Author: By Robert M. Kunes

South Carolina Lawyer

1992.

Vol. 4, No. 1, Pg. 22.

Creditors' Rights in Decedents' Estates

22Creditors' Rights in Decedents' EstatesBy Robert M. Kunes. . . one can only presume that few creditors pursue what appear to be the statutory rights afforded to them under the Uniform Probate Code."

What recourse do creditors have if a decedent's probate estate is insufficient to satisfy claims? Although there is substantial statutory authority, there is a surprising lack of judicial examination of statutes defining the rights of creditors of decedent's estates to force Personal Representatives to pursue "non probate" assets as a means of satisfying creditors' claims or, in the alternative, to seek surcharge of the Personal Representative who fails to protect the valid interest of the creditor. As a result, one can only presume that few creditors pursue what appear to be the statutory rights afforded to them under the Uniform Probate Code (UPC).

An example will illustrate the issue. Decedent dies with the following assets in his "gross estate" for estate tax purposes: Cash $ 25,000 Jointly held stocks $ 25,000 Jointly held bank account $ 20,000 Life insurance payable to spouse $250,000 payable to revocable trust $350,000 Real estate $200,000

Decedent's "gross estate" totals $870,000. During the period that creditors may file claims, the Personal Representative receives claims totalling $300,000. No action is taken to disallow any of these claims by the Personal Representative, so each claim is a valid claim against the decedent's estate.

The dilemma facing the creditors is how to get paid the monies to which they are entitled. There are five statutory provisions that merit consideration. These are §§ 62-3-710, 62-6-104, 62-6-201, 38-63-40 and 27-23-10.

What authority and what responsibility does the Personal Representative have in this situation? Under § 3-710 of the UPC (adopted as S.C. Code Ann. § 62-3710), the statute provides:

The property liable for the payment of unsecured debts of a decedent includes all property transferred by him by any means which is in law void or voidable as against his creditors, and subject to prior liens, the right to recover this property, so far as necessary for the payment of unsecured debts of the decedent, is exclusively in the personal representative [emphasis added].

It has long been an...