The commissioner has responsibility to protect creditors of the estate. The commissioner cannot approve a final account unless all claims against the estate have been resolved. Similarly, no fiduciary can file a statement in lieu of account while a claim is outstanding.
A claim may be filed with the commissioner’s office by completing the claim form in the Estate Forms section of this website and mailing the completed form, along with the required $55.00 filing fee, to the commissioner’s office at the address listed on the form. Please note that a claim submitted without the required fee cannot be accepted and will be returned to the claimant. A copy of the form must also be sent to the personal representative of the estate.
The commissioner may only accept claims against decedent’s estates. Claims cannot be filed against trusts, guardianships or conservatorships. Virginia Code § 64.2-552.A states that “[a]ny person who seeks to prove that he has a debt or demand against the decedent or the decedent’s estate shall file his claim in writing with the commissioner of accounts, who shall endorse upon it the date of the filing and sign the endorsement in his official character.” “Any such debt or demand” refers back to Virginia Code § 64.2-550 and 64.2-551 that discuss the procedures for a debts and demands hearing before the commissioner. Virginia Code § 64.2-550 states that said hearings can be held anytime the commissioner has before him the “accounts of a personal representative of a decedent.” Virginia Code § 64.2-550 states the commissioner shall issue a report of “all such debts or demands as have been sufficiently proved.” Thus, Virginia Code § 64.2-552.A refers solely to the filing of claims against decedent’s estates. There is no comparable provision in the Virginia Code for dealing with claims against conservatorships, guardianships or trusts.
If the estate contests a claim, it is not sufficient to state that the estate does not agree with the claim. In order to contest the claim, the fiduciary must request a debts and demands hearing before the commissioner to give the claimant an opportunity to present his claim.1 Either the fiduciary or the claimant can request a hearing before the commissioner.2 The hearings before the Commissioner are generally conducted in an informal manner without rigid application of the rules of evidence or procedure. If a matter is complex or would benefit from a strict application of the rules, the Commissioner has the authority under Virginia Code § 64.2-550.C to “direct the personal representative, the claimant, or both of them to institute a proceeding in the circuit court to establish the validity or invalidity of any claim or demand, that the commissioner of accounts deems not otherwise sufficiently proved.” After notice, including advertisement, and an opportunity to be heard, the commissioner shall determine the claim and file his report with the court. Such reports are to be filed within 60 days of the hearing.3
If the estate is insolvent, the commissioner cannot approve disbursements to creditors which are not in compliance with the statutory priorities established in § 64.2-528 of the Virginia Code. Note that the statutory priorities make specific allowances for family, exempt property and homestead allowances, which have priority over all claims other than administrative expenses.4 Statutory allowances entitled to priority in the disbursement of an estate are expenses of administration rather than debts of the decedent, and therefore, the allowances are entitled to priority over a federal tax lien.5
The Virginia Code permits a family allowance up to the amount of $24,000 (or monthly installments of $2,000 for up to one year).6 Under § 64.2-309 of the Virginia Code, the personal representative has the obligation to establish a reasonable family allowance out of the money in the estate, not to exceed the statutory maximum of $24,000.7 If a person is aggrieved by that determination, the sole recourse is to petition the circuit court for appropriate relief. Second, under § 64.2-310, the exempt property allowance entitles the surviving spouse to value not exceeding $20,000,8 in excess of any security interest therein, in the tangible personal property of the estate. If there is not sufficient personalty to make up the $20,000,9 the claimant may receive other assets of the estate up to the maximum allowance amount. Finally, the surviving spouse is entitled to a homestead allowance of $20,000;10 however, § 64.2-311 of the Virginia Code, which establishes the homestead allowance, states that “[t]he homestead allowance is in lieu of any share passing to the surviving spouse or minor children by the decedent’s will or by intestate succession.” In other words, by taking the homestead allowance the spouse will no longer be permitted to share in the estate as an heir and the remaining balance in the estate will pass to the decedent’s creditors and remaining heirs at law.11
Interest on claims is treated differently in solvent and insolvent estates. The general rule in the United States, including Virginia, is that interest continues to accrue on a decedent’s debt after his death and it is a legitimate claim against the estate.12 Thus, it is appropriate for a personal representative to continue to pay mortgage payments after the decedent’s death, regardless of whether the real estate is a part of the estate.13 However, when an estate is insolvent, no interest is allowed on the claims.14 This is consistent with the adoption of the chancery rule in Virginia disallowing interest on any insolvent estate.15
If the commissioner’s office receives claims filed against an estate which, in the aggregate, exceed the total value of the estate as reported in the inventory, the commissioner will give notice to the personal representative that the commissioner cannot approve a final accounting for the estate unless distributions to the creditors are in accordance with a proper determination of the validity and priority of the claims against the estate. In such cases, the commissioner recommends that the personal representative file an interim accounting as soon as practical and that he request a hearing on debts and demands to determine the validity and priority of the claims against the estate in accordance with Virginia Code § 64.2-528. Determination of priorities among competing claims is complex and “[a] personal representative who pays … creditors out of the order of preference fixed by statute is liable … no matter how honestly he may have acted, and no matter how solvent the estate may have appeared.”16
- See Va. Code Ann. § 64.2-550.
- Va. Code Ann. § 64.2-550.A.
- Va. Code Ann. § 64.2-551.
- Va. Code Ann. §§ 64.2-309; 64.2-310; 64.2-311; and 64.2-528.
- Estate of Igoe v. U.S.,717 S.W.2d 524 (Mo. 1986). See IRM 184.108.40.206(6).
- Va. Code Ann. § 64.2-309 (effective July 1, 2014; prior thereto the limit was $18,000).
- Va. Code Ann. § 64.2-310.A (effective July 1, 2014; prior thereto the limit was $15,000).
- Va. Code Ann. § 64.2-311 (effective July 1, 2014; prior thereto the limit was $15,000).
- See Johnston v. Rosenthal, 31 Va. Cir. 368 (1993).
- See, eg, In re Reber’s Estate, 143 Pa. 308, 22 A 880 (1891); Kentucky Title v. English, 50 S.W. 2d 968 (Ky. 1899); 31 Am.Jur.2d Executors and Administrators § § 652 and 673; Uniform Probate Code § 3-805.
- But see Va. Code Ann. § 64.2-531 (denying exoneration if the property is the subject of a specific devise).
- Virginia Surety Co. v. Hilton, 181 Va. 952, 27 S.E.2d 62 (1943)(interpreting the predecessor to § 64.1-170).
- Greenbrier Joint Stock Land Bank v. Opie, 165 Va. 334, 182 S.E. 255 (1935); See, e.g. Swiss Re Life Co. v. Gross, 253 Va. 139, 479 S.E.2d 857 (1997)(insolvent insurance company); Metompkin Bank v. Bronson, 172 Va. 494, 2 S.E.2d 323 (1939)(insolvent banking institution).
- Harrison, Wills and Administration § 505 (3d ed. 1989); Va. Code Ann. § 64.2-529.