Finding Estate Debts (CT)

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As part of taking inventory, an estate executor must look for and validate the debts of the decedent's estate.

Notice of Death Publication

If the estate is going through probate, the executor must typically publish a notice of death in the local newspaper where the decedent lived (see Sample Estate: Task - Publish Notice of Death). The purpose of this notice is designed to inform potential creditors of the death, and while details vary from state to state, creditors typically have 3 to 9 months to contact the estate about any debt claims. If a potential creditor misses the claims deadline then the estate would not typically have a legal obligation to pay the debt (see Sample Estate: Task - Debt Claims Expired). Note that debts to the federal government are often an exception to this rule.

Even if the estate is small enough to avoid probate in CT, the executor may still wish to publish a notice of death, to protect the estate from future debt claims, which could be quite problematic if the estate assets have already been distributed.

CT Specifics

In Connecticut, the probate court handles this responsibility itself, issuing a Notice to Creditors in a local newspaper within 14 days after the executor's appointment (see CT Gen Stat § 45a-354).

In addition, the executor has the option of giving direct notice via Form PC-234 to anyone he or she thinks may have had a claim against the decedent (see CT Gen Stat § 45a-357). The executor may issue such notice at any time, and if the notified person or organization fails to present a claim to the executor before the deadline specified in the notice (at least 90 days from the date of the notice), then that person or organization loses the right to make any claims. This can be important, since otherwise the creditor may have up to 2 years to present a claim (see Task: Debt Claims Deadline Expired).

Informal Debt Claims

There are certain debts you will quickly discover as you go through the decedent's mail, or are contacted by creditors, such as insurance premiums, credit card balances, utility bills, and so forth.

If desired, you can also run a credit report on the deceased, perhaps discovering debts about which you would otherwise be unaware. You may be able to get the credit report for free if and when you notify the credit reporting agencies of the death.

You don't necessarily have to pay any of these debts unless the associated creditor makes a formal claim against the estate, potentially in response to the notice of death, but most executors will opt to do so in an attempt to "do the right thing". Moreover, failing to pay some of these ongoing bills may result in unwarranted harm to the estate (such as foreclosure or frozen pipes bursting): see Resolving Debts: Ongoing Bills.

In any case, these bills will likely continue to arrive over time, so it will likely be several months before you have a complete picture of all debts.

Statute of Limitations and Claims Deadlines

All states impose statutes of limitations on debts, meaning that after a certain amount of time passes from a debt's due date, the courts can no longer require the debtor to repay the debt. Typically, these time limits range from 3 years for open accounts (such as credit cards) to 10 years for contract debts.

When someone dies, these statutory limitations are often both extended and shortened. They can be extended in that the expiration period is often put on hold for a few months, so that everyone has a chance to get organized and sort things out. This "hold" is officially called "tolling" the debt, but is not usually a major factor since statutory limits are measured in years.

However, statutory limits are also shortened in that almost all states have mechanisms for the estate to establish a time limit for claim submissions measured in months, not years, and these shortened limits overrule any statute of limitations (in other words, even if a statute of limitations implies that a debt would still be enforceable, it will not be enforceable if the estate limits have kicked in). The section above on Notice of Death Publications explains how the estate can limit the exposure to debts.

Note that debts which become time-barred (i.e., become unenforceable due to the statute of limitations), are considered "cancelled" by the IRS, and generate a taxable event, which the creditor may report to via a Form 1099-C (see IRS: Taxes on Canceled Debt).

CT Specifics

In Connecticut, creditors have up to 2 years from the date of death to notify the estate of any debt claims, or until the normal statute of limitations on the debt would expire, whichever comes sooner (see CT Gen Stat § 45a-375).

Connecticut maintains a 6-year statute of limitations on open debts such as credit card accounts (CT Gen Stat § 52-576), 4 years on commercial contracts involving sales from merchants (CT Gen Stat § 42a-2-725) and 3 years on oral debts (CT Gen Stat § 52-581).

However, if the executor directly notified the potential creditor of the death then the creditor has only the time period specified in the notice (at least 90 days) to respond (see Task: Publish Notice of Death).

If a debt would have expired within 30 days after the death of the decedent, then the creditor has 30 days from the appointment of the executor to make any claim. Any statute of limitation deadline is tolled (i.e., suspended) once the executor receives a claim for a given debt. See CT Gen Stat § 45a-375.

In many states, the executor can be held personally responsible for paying a debt, presented before the creditor deadline expires, if the estate cannot pay it because the executor has already made distributions to heirs. In CT, however, the executor is protected from this liability if he or she waited at least 150 days from the date of appointment to make any such good faith distributions, and he or she was unaware of the outstanding debt (CT Gen Stat § 45a-356). To take advantage of this protection, the executor must file Form PC-237 within 60 days of the expiration of the 150 appointment period.