Kentucky Adopts New Legislation For Estate Creditors

Recently enacted House Bill 435 returns the timeframe and conditions in which creditors must present claims against a decedent’s estate under KRS 396.011 to those in place prior to 2020 and similarly repeals the notice requirements enacted in 2020, as provided in KRS 396.012. Excepting government creditors, this new legislation impacts all persons, businesses, and lenders with claims arising against a debtor prior to their death.

Under the version of KRS 396.011 enacted in 2020, creditors who received notice of the death by mail or other delivery had only sixty (60) days to present any claims against the decedent’s estate. In contrast, creditors who received notice of the death through a general publication by the probate court had six (6) months to present their claims. However, in no event could a creditor bring any claims eight (8) months after the decedent’s death.

As revised in 2021, KRS 396.011 provides for only two timeframes in which creditors may present claims, both of which are conditioned on the appointment of a personal representative. A personal representative is the individual appointed in the decedent’s will or by the probate court to administer the decedent’s estate. As now written, KRS 396.011 returns the law to that which was in effect prior to 2020.

If a personal representative is appointed, creditors now have six (6) months after the appointment to present claims against the decedent’s estate. In cases where a personal representative is not appointed, creditors have two (2) years from the date of the decedent’s death in which to present claims against the estate.

Of greatest significance and uncertainty is the repeal of the notice requirements enacted in 2020 and provided in KRS 396.012. Pursuant to KRS 396.012, the probate court was required to publish notice and personal representatives were required to provide mail or other delivery notice to creditors. House Bill 435 does not incorporate new notice requirements.

The impact of House Bill 435 carries both positive and negative implications. Returning to the longer time period in which claims may be brought against an estate is a clear win for creditors. Despite this, creditors will need to be aware of whether or not a personal representative is appointed. Failure to confirm this could result in a creditor missing the six-month or two-year deadline and relinquishing its claim against the decedent’s estate. Absent affirmative notice obligations on the probate court or personal representatives, it also appears that creditors will need to take a more active role in monitoring their debtors.

Ultimately, the long-term impacts of House Bill 435 are uncertain. If you or your business have any questions about navigating your rights and obligations as a creditor, please contact a DBL Law Banking & Commercial or Collections attorney.