On February 13, the Indiana Court of Appeals decided the case of First Merchants Bank, N.A. v. Tolley, 52D02-1012-EU-35. In that case, the Court was faced with the question of whether actual notice given to an estate creditor satisfied the Indiana Code provision requiring the estate representative to provide notice to known creditors, thus triggering a shortened time for the creditor to file the claim.
Under the Indiana Code, a creditor of an estate must file a claim within three months of being given notice of the estate, or within nine months of the death of the decedent, whichever is earliest. After this deadline, the claim is forever extinguished. Also under the Indiana Code, the estate representative must publish the opening of the estate in a newspaper, and must give notice to the known creditors within a month (or as soon after as possible) of the first publication.
In First Merchants Bank, the estate representative provided notice to the creditor, a bank, by a phone call informing them of the testator’s death. The bank confirmed having the knowledge, but failed to file its claim with the estate until almost seven months after being given notice. The estate claimed that this claim was barred because it exceeded the three months after the bank was given actual notice via the phone call. The bank claimed that it was within the nine months of the testator’s death, and because it never received written notice from the estate representative, the nine month deadline would be applicable.
The Court determined that despite having actual notice of the estate, the creditor was entitled to written notice served by mail. The Court also gave the indication that in order for the notice to be effective and satisfy Due Process requirements, it must contain specific information including where the estate is being administered, who the personal representatives are, how to file a claim, when the claim deadline expires, and why it matters.
When a loved one dies and an estate must be opened, Indiana law contains strict requirements. If these requirements are not complied with, the estate may face litigation, stale claims, and uncertain administration. Deadlines, notice pitfalls, and other legal requirements of the estate representative require an experienced and knowledgeable attorney. If you are faced with such an unfortunate situation, call the Estate Planning & Probate Administration attorneys of Kahn, Dees, Donovan & Kahn to help guide you through.
