Does Maryland’s Notice Requirements Regarding Unpaid Creditors Help or Hurt?

In Maryland, whenever payment of a “debt, commission, fee, or other compensation to or for the benefit of the personal representative or the attorney for the estate” is claimed in, petitioned for, or requested from the Orphans’ Court, both interested persons and unpaid creditors are entitled to notice of such claim, petition or request. The statutory scheme is set up to ensure that those who have some type of stake in a decedent’s estate have notice of events taking place during the estate administration process that may effect their rights and the ultimate amount of any distribution they may receive from the estate.

However, unfortunately for unpaid creditors, although the Maryland statute may appear to give them an advantage in keeping their claims alive, in reality, that is not likely to be true. This is because according to Maryland law, creditors are not considered to be “interested persons”. Without “interested person” status, unpaid creditors lack the necessary standing to either object to, or file exceptions to the payment of any “debt, commission, fee or other compensation” to the personal representative or the attorney for the estate. Moreover, as long as an unpaid creditor is given the required notice and there is no fraud, material mistake or “substantial irregularity” in giving the notice, unpaid creditors are bound by the Orphans’ Court’s final decision on the claim, petition or request.

When coupled with the fact that Maryland law places the payment of unpaid creditors last on the list of the priority of claims when there are too few assets to pay all potential claims and expenses pending against an estate, creditor’s attorneys would do well to monitor their client’s probate claims closely to determine whether such claims remain viable during the sometimes lengthy estate administration process.

For more information or for a consultation regarding your legal issues, please contact McCollum & Associates, LLC, at (301) 864-6070 or jmccollum@jmlaw.net.