Tony’s father, Anthony, Sr. maintained an active cattle business until he died at age 86. Anthony operated “doing business as,” (DBA) in his own name with all the revenue and debt attributed to him personally for all purposes. When he died, Anthony owed certain people and entities and vice versa. In serving as his father’s executor, Tony was clear about how to collect the debts owed to his father. However, he was uncertain what to do about the money Anthony owed to his creditors. Should he just pay the bills or what?
Required Notices to Creditors
Notice by Publication. Tony learned from the lawyer representing him in handling his father’s estate that he was required to give notice to Anthony’s creditors of his appointment as executor and advise them to file claims against the estate by publication in a newspaper of general circulation in the county in which the probate was filed within 30 days of his appointment as executor.
Notice to Comptroller. Tony had to determine whether his father owed taxes that should be administered by the state comptroller’s office. If so, Tony had to give written notice by registered or certified mail, return receipt requested (CRRR), to the Comptroller within one month of his appointment as executor.
Notice to Secured Creditors. Tony found his father had a number of secured creditors to whom he was required to give notice of the estate’s administration. Each year, Anthony borrowed money for operating expenses through a bank loan that was secured by the cattle, equipment and other property located on the ranch. In addition, Anthony was purchasing a new tractor through a loan which was secured by the tractor itself and by other vehicles he owned outright. Five years ago Anthony had purchased 50 acres adjacent to the existing ranch. He had paid $20,000 as a down payment and taken out a mortgage secured by the acreage for the balance of $80,000 on the purchase price. Tony had to give notice to each of the secured creditors by mail, registered or CRRR within two months of his appointment as executor. Tony also had to file with the clerk of the court, in which the probate was filed, a list of these creditors with the returned receipt of notices given.
If Tony failed to give the notices required to secured creditors, he would be responsible for any damage to the creditors, unless they obtained notice by other means.
Permissive Notices to Creditors
If he chose, Tony could give written specific notice by registered or CRRR mail to certain unsecured creditors. That notice would advise these creditors that they must present their claims within four months following receipt of the notice or their claims would be barred. Some examples of these types of claims are promissory notes with no collateral; taxes; credit cards; tuition agreements; child support; alimony and agreements incident to divorce.
These unsecured creditors would have to follow strictly the statutory procedure to file their claims in order to get approval. Tony was required to determine whether a claim was legal and valid and accept or reject any claim made within thirty (30) days of receipt of the claim or it would be barred by operation of law. If Tony approved a claim, the court would either accept that approval or deny it. If Tony disapproved a claim, the court could not override his decision. As to any claim Tony rejected, the creditor had to file suit on that claim within 90 days of receipt of the rejection or the claim would be barred.
Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth, Texas. She lives and practices in beautiful Somervell County, near Chalk Mountain.