The Vermont Statutes Online

Title 14: Decedents Estates and Fiduciary Relations

Chapter 066: Settlement of Claims

• § 1201. Notice to creditors

  (a) The Probate Division of the Superior Court may issue an order excusing the executor or administrator from complying with the notice to creditors provisions of the Rules of Probate Procedure when it appears to the court that:

  (1) there are no debts existing against the decedent; or

  (2) that the debts against the decedent are all known to the executor or administrator and there are funds to pay them; or

  (3) the value of the estate does not exceed the sum of $2,500.00 and is assigned for the support of the surviving spouse.

  (b) If notice is not given because an order is entered as provided in subsection (a) of this section, any assets distributed by the administrator or executor will be subject to any claims later established, and sections 1202 and 1203 of this title shall apply, but the executors or administrators will not be liable to distributees for losses to them when required to reimburse creditors. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 1985, No. 144 (Adj. Sess.), § 58; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)

• § 1202. Statutes of limitations

  Unless an estate is insolvent, the executor or administrator, with the consent of all heirs, devisees, and legatees, may waive any defense of limitations available to the estate. If the defense is not waived, no claim which was barred by any statute of limitations at the time of the decedent’s death shall be allowed or paid. The running of any statute of limitations measured from some event other than death and advertisement for claims against a decedent is suspended during the four months following the first publication of notice under section 1201 of this title but resumes thereafter as to claims not barred pursuant to the sections which follow. For purposes of any statute of limitations, the proper presentation of a claim under section 1204 of this title is equivalent to commencement of a proceeding on the claim. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1203. Limitations on presentation of claims

  (a) All claims against a decedent’s estate that arose before the death of the decedent, including claims of the State and any subdivision thereof except claims filed by the State on behalf of Vermont Medicaid, whether due or to become due, absolute or contingent, liquidated or unliquidated, founded on contract, tort, or other legal basis, except claims for the possession of or title to real estate and claims for injury to the person and damage to property suffered by the act or default of the deceased, if not barred earlier by other statute of limitations, are barred against the estate, the executor or administrator, and the heirs and devisees of the decedent, unless presented as follows:

  (1) within four months after the date of the first publication of notice to creditors if notice is given in compliance with the Rules of Probate Procedure; provided, however, that claims barred by the nonclaim statute of the decedent’s domicile before the first publication for claims in this State are also barred in this State;

  (2) within one year after the decedent’s death if notice to creditors has not been published or otherwise given as provided by the Rules of Probate Procedure.

  (b) All claims against a decedent’s estate that arise at or after the death of the decedent, including claims of the State and any subdivision thereof, whether due or to become due, absolute or contingent, liquidated or unliquidated, founded on contract, tort, or other legal basis, are barred against the estate, the executor or administrator, and the heirs and devisees of the decedent, unless presented as follows:

  (1) a claim based on a contract with the executor or administrator, within four months after performance by the executor or administrator is due;

  (2) any other claim, within four months after it arises.

  (c) Nothing in this section affects or prevents:

  (1) any proceeding to enforce any mortgage, pledge, or other lien upon property of the estate;

  (2) to the limits of the insurance protection only, any proceeding to establish liability of the decedent or the executor or administrator for which he or she is protected by liability insurance; or

  (3) the enforcement of any tax liability.

  (d) Claims filed by the State on behalf of Vermont Medicaid must be presented within four months after the date of the first publication of notice to creditors if notice is given in compliance with the Rules of Probate Procedure, regardless of the date of the decedent’s death or when a decedent’s executor or administrator opens the estate. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 1985, No. 144 (Adj. Sess.), § 59; 2017, No. 195 (Adj. Sess.), § 6a; 2019, No. 77, § 20, eff. June 19, 2019; 2019, No. 167 (Adj. Sess.), § 16, eff. October 7, 2020; 2023, No. 113 (Adj. Sess.), § E.307.1, eff. July 1, 2024.)

• § 1204. Manner of presentation of claims

  Claims against a decedent’s estate may be presented as follows:

  (1) The claimant shall deliver to the executor or administrator a written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed, and shall file a copy of the claim with the Probate Division of the Superior Court. The claim is deemed presented on the first to occur of receipt of the written statement of claim by the executor or administrator, or the filing of the copy of the claim with the court. If a claim is not yet due, the date when it will become due shall be stated. If the claim is contingent or unliquidated, the nature of the uncertainty shall be stated. If the claim is secured, the security shall be described. Failure to describe correctly the security, the nature of any uncertainty, and the due date of a claim not yet due does not invalidate the claim made.

  (2) The claimant may commence a proceeding against the executor or administrator in any court where the executor or administrator may be subjected to jurisdiction, to obtain payment of the claim against the estate, but the commencement of the proceeding must occur within the time limited for presenting the claim. No presentation of claim is required in regard to matters claimed in proceedings against the decedent that were pending at the time of death.

  (3) If a claim is presented under subdivision (1) of this section, no proceeding thereon may be commenced more than 60 days after the executor or administrator has mailed a notice of disallowance; but, in the case of a claim that is not presently due or that is contingent or unliquidated, the executor or administrator may consent to an extension of the 60-day period, or to avoid injustice, the court, on motion, may order an extension of the 60-day period, but in no event shall the extension run beyond the applicable statute of limitations. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 1985, No. 144 (Adj. Sess.), § 60; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)

• § 1205. Classification of claims

  (a) If the applicable assets of the estate are insufficient to pay all claims in full, the executor or administrator shall make payment in the following order:

  (1) costs and expenses of administration;

  (2) reasonable funeral, burial, and headstone expenses, and perpetual care, not to exceed $3,800.00 exclusive of governmental payments, and reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him or her;

  (3) wages due employees which have been earned within three months prior to the death of the decedent, not to exceed $300.00 to each claimant;

  (4) all other claims; including the balance of wages due but unpaid under subdivision (3) of this subsection.

  (b) No preference shall be given in the payment of any claim over any other claim of the same class, and a claim due and payable shall not be entitled to a preference over claims not due but the same shall be prorated if there are insufficient assets to satisfy all claims within the class. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 2003, No. 128 (Adj. Sess.), § 1, eff. May 24, 2004.)

• § 1206. Allowance of claims

  (a) As to claims presented in the manner described in section 1204 of this title within the time limit prescribed in section 1203 of this title, the executor or administrator shall, if a claim is disallowed, mail a notice to any claimant stating that the claim has been disallowed. If, after allowing or disallowing a claim, the executor or administrator changes his or her decision concerning the claim, he or she shall notify the claimant. The executor or administrator may not change a disallowance of a claim after the time for the claimant to file a petition for allowance or to commence a proceeding on the claim has run and the claim has been barred. Every claim which is disallowed in whole or in part by the executor or administrator is barred so far as not allowed unless the claimant files a petition for allowance in the court or commences a proceeding against the executor or administrator not later than 60 days after the mailing of the notice of disallowance or partial allowance if the notice warns the claimant of the impending bar. Failure of the executor or administrator to mail notice to a claimant of action on his claim for 60 days after the time for original presentation of the claim not otherwise barred has expired shall have the effect of allowance.

  (b) Upon motion of the executor or administrator or petition of a claimant, the Probate Division of the Superior Court may allow in whole or in part any claim or claims timely presented. Notice in this proceeding shall be given as provided by the Rules of Probate Procedure.

  (c) A judgment in a proceeding in another court against an executor or administrator to enforce a claim against a decedent’s estate is an allowance of the claim.

  (d) By agreement between a claimant and the executor or administrator, a claim may be referred to one or more arbitrators, chosen either by the claimant and the executor or administrator, or, if they so request, by the Probate Division of the Superior Court. The decision of the arbitrator shall be final and binding.

  (e) Unless otherwise provided in any judgment in another court entered against the executor or administrator, allowed claims bear interest at the legal rate for the period commencing 60 days after the time for original presentation of claim has expired unless based on a contract making a provision for interest, in which case they bear interest in accordance with that provision. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 1985, No. 144 (Adj. Sess.), § 61; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)

• § 1207. Payment of claims

  (a) Upon the expiration of four months from the date of the first publication of the notice to creditors, the executor or administrator shall proceed to pay the claims allowed against the estate in the order of priority prescribed, after making provision for homestead, family, and support allowances, for claims already presented which have not yet been allowed or whose allowance has been appealed, and for unbarred claims which may yet be presented, including costs and expenses of administration. By petition to the court in a proceeding for the purpose, a claimant whose claim has been allowed but not paid as provided herein may secure an order directing the executor or administrator to pay the claim to the extent that funds of the estate are available for the payment.

  (b) The executor or administrator at any time may pay any just claim that has not been barred, with or without formal presentation, but he or she personally liable to any other claimant whose claim is allowed and who is injured by such payment if:

  (1) the payment was made before the expiration of the time limit stated in subsection (a) of this section and the executor or administrator failed to require the payee to give adequate security for the refund of any of the payment necessary to pay other claimants; or

  (2) the payment was made, due to the negligence or willful fault of the executor or administrator, in such manner as to deprive the injured claimant of his or her priority. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1208. Individual liability of executor or administrator

  (a) Unless otherwise provided in the contract, an executor or administrator is not individually liable on a contract properly entered into in his or her fiduciary capacity in the course of administration of the estate unless he or she fails to reveal his or her representative capacity and identify the estate in the contract.

  (b) An executor or administrator is individually liable for obligations arising from ownership or control of the estate or for torts committed in the course of administration of the estate only if he or she is personally at fault.

  (c) Claims based on contracts entered into by an executor or administrator in his or her fiduciary capacity, on obligations arising from ownership or control of the estate or on torts committed in the course of estate administration may be asserted against the estate by proceeding against the executor or administrator in his or her fiduciary capacity, whether or not the executor or administrator is individually liable therefor.

  (d) Issues of liability as between the estate and the executor or administrator individually may be determined in a proceeding for that purpose in this court or a proceeding in a court of competent jurisdiction. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 1985, No. 144 (Adj. Sess.), § 62.)

• § 1209. Secured claims

  Payment of a secured claim is upon the basis of the amount allowed if the creditor surrenders his or her security; otherwise payment is upon the basis of one of the following:

  (1) if the creditor exhausts his or her security before receiving payment, unless precluded by other law upon the amount of the claim allowed less the fair value of the security; or

  (2) if the creditor does not have the right to exhaust his or her security or has not done so, upon the amount of the claim allowed less the value of the security determined by converting it into money according to the terms of the agreement pursuant to which the security was delivered to the creditor, or by the creditor and executor or administrator by agreement, arbitration, compromise, or litigation. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1210. Claims not due and contingent or unliquidated claims

  (a) If a claim that will become due at a future time or a contingent or unliquidated claim becomes due or certain before the distribution of the estate, and if the claim has been allowed or established by a proceeding, it is paid in the same manner as presently due and absolute claims of the same class.

  (b) In other cases the executor or administrator, or, on motion of the executor or administrator or the claimant, in a proceeding for the purpose, the Probate Division of the Superior Court, may provide for payment as follows:

  (1) If the claimant consents, he or she may be paid the present or agreed value of the claim, taking any uncertainty into account.

  (2) Arrangement for future payment, or possible payment, on the happening of the contingency or on liquidation may be made by creating a trust, giving a mortgage, obtaining a bond or security from a distributee, or otherwise. (Added 1975, No. 240 (Adj. Sess.), § 7; amended 1985, No. 144 (Adj. Sess.), § 63; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)

• § 1211. Counterclaims

  In allowing a claim, the executor or administrator may deduct any counterclaim which the estate has against the claimant. In determining a claim against an estate, a court shall reduce the amount allowed by the amount of any counterclaims and, if the counterclaims exceed the claim, render a judgment against the claimant in the amount of the excess. A counterclaim, liquidated or unliquidated, may arise from a transaction other than that upon which the claim is based. A counterclaim may give rise to relief exceeding in amount or different in kind from that sought in the claim. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1212. Execution and levies prohibited

  No execution may issue upon nor may any levy be made against any property of the estate under any judgment against a decedent or an executor or administrator, but this section shall not be construed to prevent the enforcement of mortgages, pledges, or liens upon real or personal property in an appropriate proceeding. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1213. Compromise of claims

  When a claim against the estate has been presented in any manner, the executor or administrator may, if it appears for the best interests of the estate, compromise the claim, whether due or not due, absolute or contingent, liquidated or unliquidated. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1214. Encumbered assets

  If any assets of the estate are encumbered by mortgage, pledge, lien, or other security interest, the executor or administrator may, except as otherwise provided by will, pay the encumbrance or any part thereof, renew or extend any obligation secured by the encumbrance, or convey or transfer the assets to the creditor in satisfaction of his or her lien, in whole or in part, whether or not the holder of the encumbrance has filed a claim, if it appears to be for the best interests of the estate. Payment of an encumbrance does not increase the share of the distributee entitled to the encumbered assets unless the distributee is entitled to exoneration. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1215. Administration in more than one state; duty of executor or administrator

  (a) All assets of estates being administered in this State are subject to all claims, allowances, and charges existing or established against the executor or administrator wherever appointed.

  (b) If the estate either in this State or as a whole is insufficient to cover all family exemptions and allowances, determined by the law of the decedent’s domicile, prior charges and claims, after satisfaction of the exemptions, allowances, and charges, each claimant whose claim has been allowed either in this State or elsewhere in administrations of which the executor or administrator is aware, is entitled to receive payment of an equal proportion of his or her claim. If a preference or security in regard to a claim is allowed in another jurisdiction but not in this State, the creditor so benefited is to receive dividends from local assets only upon the balance of his or her claim after deducting the amount of the benefit.

  (c) In case the family exemptions and allowances, prior charges and claims of the entire estate exceed the total value of the portions of the estate being administered separately, and this State is not the state of the decedent’s last domicile, the claims allowed in this State shall be paid their proportion if local assets are adequate for the purpose, and the balance of local assets shall be transferred to the domiciliary executor or administrator. If local assets are not sufficient to pay all claims allowed in this State the amount to which they are entitled, local assets shall be marshalled so that each claim allowed in this State is paid its proportion as far as possible, after taking into account all dividends on claims allowed in this State from assets in other jurisdictions. (Added 1975, No. 240 (Adj. Sess.), § 7.)

• § 1216. Final distribution to domiciliary representative

  The estate of a nonresident decedent being administered by an executor or administrator appointed in this State shall, if there is an executor or administrator of the decedent’s domicile willing to receive it, be distributed to the domiciliary executor or administrator for the benefit of the successors of the decedent unless:

  (1) by virtue of the decedent’s will, if any, and applicable choice of law rules, the heirs, devisees, and legatees are identified pursuant to the local law of this State without reference to the local law of the decedent’s domicile;

  (2) the executor or administrator of this State, after reasonable inquiry, is unaware of the existence or identity of a domiciliary executor or administrator; or

  (3) the court orders otherwise in a proceeding for a final decree of distribution. In other cases, distribution of the estate of a decedent shall be made in accordance with the other sections of the chapter. (Added 1975, No. 240 (Adj. Sess.), § 7.)