Guardianship Claim Bars Probate Claim?
Imagine that you are owed money by someone who becomes incapacitated and they have a guardian appointed. Your debt is not secured by any property, such as real estate. The guardian sends you a notice to submit your claim for payment.
The debtor is of an advanced age or not expected to live long due to health reasons. So you opt to wait for the decedent to die and then file a claim in the probate case.
The probate laws set out a time period for filing claims against the probate estate. Can you rely on the time period for filing claims in the probate rules? The recent W. Tex. LTC Partners, Inc. v. Collier, 595 S.W.3d 308 (Tex. App. [Houston 1st Dist.] 2020) case answers this question.
Facts & Procedural History
This case involved a dispute over nursing home costs.
The resident lived in a nursing home for several months in 2013. He was them moved to another nursing home.
The second nursing home contacted a guardian care management company as it was concerned that the resident could not care for himself.
The guardian care management company was appointed guardian of the resident. On September 12, 2014, the guardian sent a letter to the first nursing home notifying it of the guardianship proceedings and that it had 120 days to file a verified claim in the guardianship case for any amounts owed by the resident. The nursing home did not file an authenticated claim as instructed.
The resident died and the guardian filed for probate and was appointed as the executor for the resident’s estate. The nursing home filed a claim in the probate estate.
The executor denied the claim as it was not filed timely in the guardianship proceeding. The probate court agreed. This nursing home filed this appeal.
Section 1153.001 requires a guardian to provide notice to any creditors to submit claims.
Section 1153.004 provides for notice of permissive notice for unsecured claims:
The guardian of the estate may expressly state in a notice given to an unsecured creditor under Section 1153.003(a)(2) that the creditor must present a claim not later than the 120th day after the date the creditor receives the notice or the claim is barred, if the claim is not barred by the general statutes of limitation. A statement under this section must include:(1) the address to which the claim may be presented; and(2) an instruction that the claim be filed with the clerk of the court that issued the letters of guardianship.
If the claimant does not submit a valid claim during this 120 day period, the claim is barred.
Probate Estate Claims
Claims against a probate estate are governed by Section 355.001:
A claim may be presented to a personal representative of an estate at any time before the estate is closed if suit on the claim has not been barred by the general statutes of limitation.
Like the guardianship rules cited above, the executor of a probate estate can provide unsecured creditors notice that can bar future claims. This is provided for in Section 355.060 and 308.054.
Guardianship Laws vs. Probate Administration Laws
This brings us back to this case. The creditor failed to respond to the permissive notice in the guardianship. It completed with the time limits for filing a claim in the probate proceeding.
The question for the court is whether the claim in the probate proceeding is barred by the failure file a claim in the guardianship proceeding.
The court concluded that it was barred. It reasoned that the Texas legislature set out two Code sections, one for guardianships and one for probate administrations, and that the guardianship law could not be trumped by the probate administration law.
This was based on “the absurd result of reviving a claim barred while a ward was alive once the ward dies” if the guardianship law could be overridden by a later probate.
This case highlights why it is important that unsecured creditors file a claim when they receive notice of the claim. This is true for guardianship cases as well as probate administrations.