Death is final. And when a person who is a party to a lawsuit dies, death can be final for the opposing party too unless they take action quickly.
Dead people cannot be sued by law. Therefore, any claims against a decedent (including those already in progress by way of an existing lawsuit) must be brought in the decedent’s estate. By estate, I am referring to a probate estate. This is true even where a decedent died with everything he owns held in a Trust. Why the probate estate? Because that is where all claims against a decedent must start.
And there are two very important deadlines you must remember when trying to preserve a claim against a decedent. First, is the overall one-year statute of limitations under CCP 366.2. This harsh rule states that any claims against a decedent must be brought within a year of the decedent’s death or they are forever barred. This is true even though the statute of limitations would have been longer had the person survived. For example, the statute of limitations for breach of a written contract is 4 years, but if the breaching party dies, then the statute is cut down to a one year limit. And this rule applies regardless of whether you knew the person died or not!
Second, if a decedent dies and his heirs/beneficiaries open a probate estate, then any creditor has only 4 months from the date an executor is officially appointed to file a claim in probate.
The lifecycle of a claim
When there is a claim against a decedent, or an ongoing lawsuit against a deceased defendant, the first step any creditor must take is to file a “Creditor’s Claim” in the decedent’s probate estate.
If a probate estate is not opened (and this happens often where the decedent died with a trust because no probate is necessary to transfer his assets), then the creditor must file to open a probate (creditors have the right to do this as interested parties of the decedent’s estate). Once the estate is opened, then the claim is filed with the estate.
The estate representative (i.e., the Executor of Administrator) then has to either accept the claim, and thereby agree to pay it, or reject the claim. After 30 days the creditor can deem the claim rejected. Once a claim is rejected, the creditor must then file a lawsuit against the estate to force the estate to pay the claim. If a lawsuit is already pending against a dead defendant, then once the claim is rejected by his estate the estate representative must be substituted in as the party to the lawsuit. The lawsuit can then continue.
If a judgment is achieved as part of the lawsuit, then that judgment can be enforced against the estate. If there are no assets in the estate, then the creditor can go after the decedent’s trust.
Sound confusing? It is, and the procedural requirements are strictly enforced so any mistake along the way can be fatal to the creditor in attempting to collect a debt. So beware, any death of a party to a lawsuit, or any death of a debtor, can be fatal to your claim too.