NY SCPA, Surrogate's Court Procedure Act, Gauthier

CLAIMS; PAYMENT OF DEBTS AND FUNERAL EXPENSES

Section 1802. Effect of failure to present claim. 1803. Form and verification of claims; service of notice. 1804. Contingent or unliquidated claims; retention of assets for estate taxes. 1805. Determination of issues arising between representative and the estate; suspension of statute of limitations in certain cases. 1806. Allowance or rejection of claims. 1807. Effect of allowance of claim by fiduciary. 1808. Effect of rejection of claim by fiduciary. 1809. Proceeding to determine validity and enforceability of claims. 1810. Claimant`s right to action at law or in equity. 1811. Payment of debts and funeral expenses. 1812. Leave to issue execution against decedent`s real property. 1813. Disputed or unsettled debt or claim may be compromised, compounded or sold; compromise of infant`s claim or action in supreme court. 1814. Application. S 1802. Effect of failure to present claim If any claim is not presented on or before the day fixed in the notice published pursuant to the preceding section or if no notice is so published, within 7 months from the date of issue of letters, the fiduciary shall not be chargeable for any assets or moneys that he may have paid in good faith in satisfaction of any lawful claims or of any legacies or distributions to the legatees or distributees of the decedent before such claim was presented. Such 7 month period shall begin on the date letters were first issued to any fiduciary, including a temporary administrator or a preliminary executor, and shall not be interrupted by any subsequent issue of letters, except that the time during which there is no fiduciary in office shall not be counted as part of such period. S 1803. Form and verification of claims; service of notice 1. Every claim against the estate of a decedent other than claims for expenses of administration and claims of the United States or the state of New York must be in writing, contain a statement of the facts upon which it is based and the amount thereof. In addition the fiduciary may require the claimant to present proof by affidavit that the amount of the claim is justly due, that all payments thereon, if any, have been credited, that the claimant knows of no offsets and no evidence of indebtedness and holds no security, except as specifically described in the affidavit. 2. The notice of claim required by this section shall be presented by delivering a copy thereof to a fiduciary personally or by certified mail return receipt requested addressed to the fiduciary at the place of residence stated in the designation required by 708 or if a notice has been published pursuant to 1801, at the place specified therein or upon the clerk of the court pursuant to the designation required under 708 whenever the fiduciary cannot be found or served within the state after due diligence. 3. No claimant shall be entitled to enforce payment of a claim in any proceeding in the court unless the claim be presented in accordance with the provisions of this section or unless it shall be based upon a decree or order of the court or a valid judgment rendered by a court of competent jurisdiction. S 1804. Contingent or unliquidated claims; retention of assets for estate taxes 1. Whenever at the death of any person there shall be a contingent or unliquidated claim against the decedent`s estate or an outstanding bond, recognizance or undertaking upon which the decedent was principal, surety, or indemnitor and on which at the time of the decedent`s death the liability is still contingent or unliquidated, a claimant or a surety shall have the right to file with the fiduciary an affidavit showing the facts upon which the contingent or unliquidated liability is based and the probable amount thereof, and there shall be no distribution without reservation of such estate assets as the court, by a special proceeding or upon the final accounting, shall determine to be adequate to pay the contingent or unliquidated claim when the amount thereof shall become due and payable. In fixing the amount to be reserved for payment of the claim the court may determine the value of any security or collateral to which the creditor may resort for payment of the debt and may thereafter direct the reservation if necessary of sufficient estate assets to make up the difference between the value of such security or collateral and the amount necessary to pay the contingent or unliquidated claim. 2. If before a final judicial accounting and decree the contingent or unliquidated claim or liability shall have become fixed and liquidated, then evidence thereof shall be filed with the fiduciary in accordance with the provisions of 1803. If the contingent or unliquidated claim has not become so fixed and liquidated the decree on a final accounting shall direct that the assets found sufficient to satisfy the claim or the proportion to which it is entitled be retained in the hands of the accounting party for such period or periods as the court may deem proper for the purpose of being applied to the payment of the claim when fixed and liquidated and that so much of the assets as are not needed for that purpose be afterwards distributed according to law. 3. Where the state estate tax is or may be due and the amount thereof has not been finally determined or such tax cannot for any reason be paid at the time of final judicial accounting and decree thereon, the decree on a final accounting shall direct that assets found sufficient to satisfy the tax or possible tax be retained in the hands of the accounting party for such period as the court may deem proper for the purpose of being applied to the payment of the tax. In that event the commissioner of taxation and finance shall be among those served upon the final accounting. Such portion of the assets as are not needed for that purpose shall be distributed according to law. S 1805. Determination of issues arising between representative and the estate; suspension of statute of limitations in certain cases 1. A fiduciary shall not pay out of the property of the decedent any debt alleged to be owing to him by the decedent until proved and allowed by the court in the proceeding for the judicial settlement of his account. Where a contest arises between the accounting party and any of the other parties respecting property alleged to belong to the estate which the accounting party claims individually or respecting a debt alleged to be due by the accounting party to the decedent or by the decedent to the accounting party, the contest must be tried and determined in the same manner as any other issue arising in the court. 2. Notwithstanding the provisions of the preceding subdivision a fiduciary at any time may present a petition for permission to pay a debt alleged to be owing to him by the decedent. The court may authorize such payment by ex parte order upon such protection to the estate as it deems proper or may require notice of the application to be given to such persons and in such manner as it directs. 3. From the death of the decedent until the first judicial settlement of the account of the fiduciary, the running of the statute of limitations against a debt owing to him from the decedent or any other cause of action in his favor against the decedent is suspended, unless the fiduciary was appointed on the revocation of former letters issued to another person, in which case the running of the statute is so suspended from the issuance of letters to him until the first judicial settlement of his account. After the first judicial settlement of the account of a fiduciary the statute of limitations begins to run again against a debt due to him from the decedent or any other cause of action in his favor against the decedent. S 1806. Allowance or rejection of claims 1. Every fiduciary shall promptly give notice in writing to the claimant of the allowance of the claim or of its rejection or of the rejection of some part thereof which he specifies. 2. A notice rejecting a claim in whole or in part shall state the reasons therefor. 3. If the fiduciary shall fail to allow the claim within 90 days from the date that it has been presented to him, the claim shall be deemed to have been rejected. 4. If a claim has been allowed pursuant to the terms of this section, process may issue to the fiduciary requiring the fiduciary to show cause why the petitioner`s claim should not be paid. The court may dismiss the petition or direct payment or satisfaction of the claim in whole or in part and may require a refunding bond. S 1807. Effect of allowance of claim by fiduciary 1. Whenever a fiduciary shall allow a claim other than the fiduciary`s own the validity of the claim shall thereby be established, but if it shall appear that the claim was improperly allowed or was fraudulently or negligently paid, any party adversely affected thereby may file objections thereto in any proceeding for the judicial settlement of the account of the fiduciary. A copy of the objections shall be served upon all parties who have appeared and if the claimant has not appeared a copy shall be served upon the claimant personally or by mail. If the court sustains the objections the claim shall thereupon be dismissed if it has not been paid. If it has been paid, in whole or in part, and an amended petition or objections request a direction that the claimant repay to the fiduciary of the estate any amount of the estate assets determined on the settlement of the account to have been paid to a claimant as a result of fraud, negligence or collusion and if a supplemental citation to this effect was issued and served upon the claimant, then the court, is authorized in the accounting decree to direct repayment by the creditor of the excess to the fiduciary of the estate and may, in addition, impose a surcharge against the fiduciary or otherwise as justice shall require. If there is no amended petition or answer requesting a direction that the claimant repay the amount of estate assets determined to have been paid as a result of fraud, negligence or collusion then a surcharge shall be imposed against the fiduciary in the amount the estate has been damaged by such fraud, negligence or collusion.

2. In such accounting proceeding a party adversely affected may show that a judgment on a claim against a fiduciary was obtained by fraud, negligence or collusion. If the court determines that the judgment was so obtained, a surcharge shall be imposed against the fiduciary in the amount the estate has been damaged by such fraud, negligence or collusion. S 1808. Effect of rejection of claim by fiduciary 1. Except as otherwise provided in 1810, whenever a fiduciary rejects a claim in whole or in part all issues relating to the validity and enforceability of the claim shall be tried and determined upon the judicial settlement of his account. 2. The account of the fiduciary shall list all claims rejected by him in whole or in part and the reason for their rejection. 3. Service of the notice required by 1806 shall be completed prior to the filing of any account reporting a rejected claim. 4. Any claimant adversely affected may within 8 days from the return of process serve and file objections to the account together with a copy of his notice of claim and any supporting affidavit filed with the fiduciary. If the fiduciary shall raise any affirmative defense to the claim that is not set forth in his account, he shall within 5 days from the service upon him of a copy of the objections serve and file a reply to the objections setting forth the affirmative defense. Any person whose interests in the estate may be adversely affected by the allowance of the claim may within 8 days from the filing of objections by a claimant serve and file a reply to the objections setting forth any defense to the claim not set forth in the account. 5. Where one whose claim has been rejected by the fiduciary has petitioned for a compulsory judicial settlement of his account the fiduciary may in his answer to the petition show the condition of the estate and all facts relating to the rejection of the claim and pray for a judicial determination of the validity and enforceability of the claim as a preliminary step in the accounting proceeding. The court may thereupon determine the claim and all issues relating thereto and make such direction for its payment as justice shall require. 6. With respect to any limitation of time within which an action or proceeding may be brought and with respect to examinations before trial, bills of particulars and disclosure generally, the presentation of a claim as provided in 1803 shall be deemed the institution of a special proceeding for the collection of the claim. S 1809. Proceeding to determine validity and enforceability of claims 1. Whenever a fiduciary has knowledge or notice that a claim may be asserted and no written notice of claim has been presented to him or if a fiduciary has reason to question the validity of any claim, whether such notice has been presented to him or not, and no action or proceeding to enforce the claim has been instituted, the fiduciary may present a petition to the court showing the facts and praying that the claimant or possible claimant be required to show cause why his claim, if any, should not be disallowed. Similarly, any claimant whose claim is made in compliance with 1803, and whose claim has not been allowed in whole pursuant to 1806 may petition the court showing the facts and praying that the fiduciary be required to show cause why the claim should not be allowed. 2. If the petition be entertained process shall issue to the claimant or possible claimant or fiduciary, as the case may be, and, whenever the claim sought is in excess of ten thousand dollars or constitutes twenty-five percent or more of the estimated gross probate estate, whichever is the lesser, to any person whose rights or interests will be affected by allowance of the claim and the person cited may within 8 days from the return day, serve and file an answer. The answer, if filed by the claimant, shall be accompanied by a copy of any notice of claim, supporting affidavit or other evidence of the claim, if any, filed with the fiduciary. If the fiduciary deems it necessary he may, within 5 days from the service upon him of a copy of the answer, serve and file a reply thereto. The claimant may also file a reply to an answer served by the fiduciary. 3. The court may determine the claim and all issues relating thereto as a preliminary step in the accounting proceeding and make such direction as justice shall require. S 1810. Claimant`s right to action at law or in equity Nothing in this article shall prevent a claimant from commencing an action on his claim at law or in equity, provided that where a claim has been presented and rejected or deemed rejected pursuant to 1806 in whole or in part the action must be commenced within 60 days after such rejection. Failure to bring such action within 60 days shall not, however, be deemed a waiver of claimant`s right to a jury trial. S 1811. Payment of debts and funeral expenses 1. The reasonable funeral expenses of the decedent subject to the payment of expenses of administration shall be preferred to all debts and claims against his estate and shall be paid out of the first moneys received by his fiduciary. 2. Every fiduciary must proceed with diligence to pay the debts of the decedent according to the following order: (a) Debts entitled to a preference under the laws of the United States and the state of New York. (b) Taxes assessed on property of the deceased previous to his death. Any taxes so paid by a fiduciary on real property which descends to a distributee or passes to a devisee shall be a charge thereon for which the beneficiary must reimburse the estate unless in the case of wills the testator has indicated expressly or by necessary implication that such taxes be otherwise paid. (c) Judgments docketed and decrees entered against the decedent according to the priority thereof respectively. (d) All recognizances, bonds, sealed instruments, notes, bills and unliquidated demands and accounts. 3. Preference shall not be given in the payment of a debt over other debts of the same class, except those specified in subparagraph (c) of subdivision 2. A debt due and payable shall not be entitled to a preference over debts not due. The commencement of a suit for the recovery of a debt or the obtaining of a judgment thereon against the fiduciary shall not entitle this debt to preference over others of the same class. Debts not due may be paid according to the class to which they belong, after deducting a rebate of legal interest on the sum paid for the unexpired term of credit without interest. A debt or claim of the fiduciary shall not have preference over others of the same class, except that if the claim of the fiduciary is secured by collateral the fiduciary may apply to the court for leave to surrender the collateral and make payment of the claim upon such conditions as directed by the court. Preference may be given to rents due or accruing on leases held by the decedent at the time of his death over other debts specified in subdivision 2 (d) if it appears to the court`s satisfaction that such preference will benefit the estate of the decedent. 4. Dividends payable to secured creditors in insolvent estates shall be computed only upon the difference between the face amount of the claim without security and the value of the security itself as of a date to be determined by the court for the fixation of the rights of creditors, unless the creditor shall surrender his security to the fiduciary, in which event the dividend upon such claim when established as valid shall be computed on the full face amount thereof. S 1812. Leave to issue execution against decedent`s real property For the purpose of procuring a decree granting leave to issue execution against a decedent`s real property a judgment creditor shall present to the court a verified petition showing the facts and praying for such decree and that the person whose interest in the property will be affected by a sale by virtue of the execution and the fiduciary of the judgment debtor may be required to show cause why it should not be granted. Upon the presentation of the petition the court must issue process accordingly. The process must be served either personally or in such manner as directed by the court and upon the return thereof the court may make such decree as justice shall require. S 1813. Disputed or unsettled debt or claim may be compromised, compounded or sold; compromise of infant`s claim or action in supreme court 1. Upon the application of a fiduciary or any person (other than a claimant) whose rights or interests will be affected by allowance of the claim, the court may for good cause shown either ex parte or upon notice to such persons and in such manner as it directs authorize the compromising or compounding of any debt, claim or demand, due or to become due, which is necessary to be settled, adjusted or liquidated in connection with the settlement of an estate and the sale at public auction on such notice as directed by the court of any uncollectible, stale or doubtful debt or claim belonging to the estate, but any party interested in the final settlement who has not received notice may show on the settlement that the debt or claim was fraudulently compromised or compounded. 2. In addition to the foregoing powers, the surrogate of any county in which there is no resident justice of the supreme court qualified to act and in which there is then no term of supreme court in session may act pursuant to the provisions of the CPLR with respect to an application for the approval of a settlement of an infant`s claim or of a cause of action belonging to an infant, pending in the supreme court in that county, to the same extent and with the same power and jurisdiction as though he were a justice of the supreme court. S 1814. Application The provisions of this article are not applicable to trusts or the administration thereof.

Surrogate's Court Procedure Act

Article 18, Claims, Debts