Sunday, November 11, 2007

How to Shorten the Limitation Period for Disputed Estate Debts

When administering an estate, an executor or administrator is required to pay the deceased’s debts out of the estate assets. But, what if the executor knows of a claim that he or she does not consider legitimate?

If the person making the claim sues, the executor can then proceed through the litigation process. It may take time, but at least the executor knows that the claimant is pursuing the claim.

But, what if the person who may make a claim doesn’t sue right away?

I have written before about limitation periods for starting a claim. The limitation periods in British Columbia vary depending on the type of claim. The most common limitation periods are two years, six years and ten years.

If you are the executor, you probably don’t want to wait for the limitation period to expire before paying those creditors whose claims you do consider legitimate, or distributing the estate to the beneficiaries.

In British Columbia, Section 66 of the Estate Administration Act, RSBC 1996, c. 122, allows the executor or administrator to give notice in writing that he or she disputes the claim. The notice must refer to section 66. The notice requires the person alleging that he or she is owed money to start a lawsuit within six months of the notice if the alleged dept was due. If the alleged debt is not yet due at the time of the notice, then the person making the claim must start the lawsuit within six months of the time the debt becomes due.

The section 66 notice is an effective way for an executor or an administrator to force someone who might make a claim to decide whether to sue within a reasonable period of time. In this way an executor or administrator can avoid significant delay in administering an estate if there are disputed debts.

No comments: