Disclaimer: This article is for educational purposes and does not constitute legal advice. For legal guidance, consult a qualified attorney.
Understanding Creditor Claims in Massachusetts Probate
As a personal representative in Massachusetts with limited funds, you must follow statutory procedures to notify creditors, manage claims, and protect yourself from personal liability. Massachusetts General Laws Chapter 190B (the Uniform Probate Code) provides tools to handle claims efficiently when assets are scarce.
1. Publish Notice to Creditors
Under M.G.L. c. 190B § 3-804, you must publish a notice in a local newspaper and send direct notice to known creditors. Creditors then have six months from the date of first publication to file claims. Claims not filed in time are barred by M.G.L. c. 190B § 3-805.
2. Use the Small Estate Affidavit Process
If total estate assets subject to administration do not exceed $25,000 (excluding real estate), you can collect assets or handle claims through a small estate affidavit under M.G.L. c. 190B § 3-1101. This streamlined process avoids full probate administration and most creditor-claim procedures.
3. Petition for Bond Reduction or Waiver
Massachusetts typically requires a surety bond to protect estate creditors (M.G.L. c. 190B § 3-707). If funds are limited, you can petition the probate court to reduce or waive the bond requirement for cause, such as insufficient assets or creditor agreement.
4. Deposit Assets into the Court Registry
When you hold cash or marketable securities but lack liquid funds for all claims, the court may allow you to deposit those assets into its registry. By doing so under M.G.L. c. 190B § 3-805, you obtain court approval for partial distributions and protection from personal liability on unpaid claims.
5. Prioritize and Negotiate Claims
Massachusetts law sets a priority order for payment: administrative expenses, funeral costs, family allowances, expenses of last illness, and other debts. If funds fall short, you may negotiate with unsecured creditors to accept reduced payments or installment plans. Document any agreements in writing and seek court approval if required.
6. Petition for Directions from the Probate Court
If you face uncertainty about distributing limited assets, you can file a petition for instructions under M.G.L. c. 190B § 3-707 and related sections. The court can authorize specific steps, approve a claims-paying protocol, or set amounts to hold in reserve for potential claims.
Helpful Hints
- File publication and mail notices promptly—missed deadlines may bar even valid claims.
- Inventory assets carefully and value them accurately to determine whether the small estate process applies.
- Keep clear records of all notices sent, bonds filed, and court orders obtained.
- Communicate openly with beneficiaries about potential delays in distribution due to creditor issues.
- Consider informal payment agreements with creditors when formal distribution is impractical.