How Do Creditors Get Paid By an Estate That Is Not Probated?
If no probate is required for other reasons, a beneficiary or trustee who is entitled by Will or the intestacy statute to substantially all of the decedent’s assets may give nonprobate notice to creditors. If more than one person is entitled to substantially all of decedent’s assets, then those persons may agree to appoint one person entitled to give nonprobate notice to creditors. The person entitled to give nonprobate notice to creditors is called the “notice agent.” The notice agent must file a declaration and oath with the clerk of the superior court. Persons not qualified to be notice agent are: corporations, trust companies, and national banks (with some exceptions), minors, a person of unsound mind, or a person convicted of a felony or misdemeanor involving moral turpitude. RCW 11.42.010. Crimes involving "moral turpitude" are the that constitute "an act of baseness, vileness, or depravity in the private and social duties which a man owes to his fellow men or to society in general." City of Seattle v. Jones, 3 Wash. App. 431, 467, 475 P.2d 790 (1970), affirmed by 79 Wn.2d 626 (1971). Crimes involving moral turpitude are characterized by their intentional injury to the victim's physical or financial well-being, and a general disregard for the law. If a person at one time qualified becomes unqualified, the court shall revoke that person’s status as notice agent. RCW 11.42.010. An out-of-state notice agent must have a resident agent appointed for service of legal papers in Washington State. The resident agent must reside in the county of notice or must be an attorney of record for the notice agent. RCW 11.42.010.
The proposed notice agent must check to insure that no other notice agents for the decedent have been appointed. Then the notice agent files notice to creditors and then causes that notice to be published in a legal newspaper in the decedent’s county of residence once per week for three consecutive weeks. The notice agent should also give actual notice to known creditors by serving upon the creditor or mailing to the creditor’s last known address a copy of the notice to creditors. The notice agent is also required to mail a copy of the notice to creditors to the Department of Social and Health Services. A notice agent must file proof with the court of giving notice to creditors and publishing that notice. RCW 11.42.020. The creditor claim form is contained at RCW 11.42.030, and its contents and manner of delivery are further specified at RCW 11.42.070.
The notice agent must conduct a thorough search of the decedent’s papers and financial statements in searching for creditors. When the personal representative has completed this search, she is presumed to have done her duty regarding creditors, and she may file with the court an affidavit concerning reasonably ascertainable creditors. This affidavit and the reasonably diligent search that underlies it may affect the status of undiscovered creditors which are subsequently discovered. RCW 11.42.040, 11.42.050.
The notice agent has a duty to allow or reject all claims properly presented. RCW 11.42.080, 11.42.090, 11.42.100. No claim barred by the statute of limitations may be allowed. RCW 11.42.090. The notice agent has a right to compromise claims in the best interests of the estate. Claimant of a rejected claim has thirty days in which to bring suit on the rejected claim. RCW 11.42.100. The notice agent may not pay the claim of the notice agent or of any other person who receives property as a result of the decedent’s death unless all other claims filed have been paid in full or otherwise settled, regardless whether the claims are allowed or rejected. RCW 11.42.090.
If a notice agent dies, resigns, or is removed, the successor notice agent must publish notice of the vacancy for two successive weeks in a legal newspaper in the county of decedent’s residence, if the vacancy occurred within twenty-four months of the decedent’s death, and provide actual notice to any creditor who filed a claim (some exceptions). RCW 11.42.140
If a personal representative is appointed with respect to the decedent’s estate, the notice agent’s powers immediately cease. The personal representative may adopt or reject any of the notice agent’s acts. RCW 11.42.150.