Someone Who Died Owes Me Money — How Do I Claim?

When a person dies owing money, the debt becomes a claim against their estate. Debts are paid before beneficiaries receive anything — the definition of “purposes of administration” in section 1 of the Public Curator Act (Chapter 81) puts debts, funeral and testamentary expenses, duties and commission ahead of distribution.

Getting paid, though, depends on doing the right thing at the right time.

Watch for the advertisement

Section 20(1) requires the Public Trustee, at such times as it thinks proper, to advertise in the National Gazette and in such newspapers as it thinks expedient, calling on creditors of the estates it is administering to come in and prove their debts on or before a time fixed in the notice.

That advertisement is the formal invitation to creditors. If you know or suspect a debtor has died, watching the Gazette is not paranoia — it is how the system expects you to find out.

Proving the debt

“Proving” means satisfying the Public Trustee that the debt is real. Section 20(2) allows the Public Trustee to allow a claim on the affidavit or statutory declaration of the claimant alone, or on such further evidence as it requires.

That is a comparatively generous standard — but “alone” does not mean “unsupported”. A declaration that simply asserts a figure invites a request for more. Attach what you have:

• the written agreement, loan note, invoice or account;
• bank transfer records or deposit slips showing the money moving;
• messages in which the deceased acknowledged the debt;
• a record of any part-payments, and when they were made;
• the names of anyone present when the arrangement was made.

The same evidential thinking applies as in any civil claim — see someone owes you money.

How and when you get paid

Section 20(3): as soon after the time allowed for proof as it conveniently can, the Public Trustee shall pay the debts proved if they can be paid in full, or, if they cannot, declare and pay a dividend on them.

A “dividend” is a proportion — so many toea in the kina. Where an estate cannot meet everything, creditors share what there is.

Section 20(4) and (5) deal with late assets and late creditors. If further assets are collected after payment, the Public Trustee pays any unpaid part of proved debts and any debts subsequently proved, or a dividend on them. Creditors who prove later are first paid a dividend equal to what earlier creditors received, before further distribution — so proving late does not automatically put you behind, though it does mean waiting.

If your claim is rejected: the six-month bar

This is the provision that destroys claims, and it operates whether or not you were paying attention.

Under section 21(1), and notwithstanding section 60 of the Wills, Probate and Administration Act, where a person claiming to be a creditor lodges a claim the Public Trustee refuses to recognise, or where a person called on by written notice fails for one month to lodge a claim in the prescribed manner, the Public Trustee may give that person written notice of its refusal, or of not having received the claim.

Then section 21(2): where the person does not within six months after receiving that notice institute proceedings to enforce the claim, the Public Trustee may distribute the assets without taking the claim into account.

And section 21(3): on such a distribution, the person’s right to recover that amount is absolutely barred as against the portion of the estate that has been distributed.

“Institute proceedings” means starting a court case — not writing another letter, and not phoning the Office. If your claim has been rejected and you intend to press it, that is a deadline to take to a lawyer immediately.

Claims that were already stale

Separately, section 5B(h) gives the Public Trustee power to accept or reject a claim against an estate which is statute or time barred. A debt that had already passed its limitation period before the death does not become fresh because the debtor died.

What the estate pays before you

Two provisions reduce what is available to creditors, and it is better to know about them early:

• Section 41 — the Public Trustee may make advances for expenses necessarily incurred in administering an estate, and may charge the estate interest at up to 5% per annum on sums advanced until repaid.
• Section 42 — where the Public Trustee or an agent has taken possession of an estate, the estate is liable for the same commission and charges as if an order under section 10 had been made, whether or not the Public Trustee further administers it.

Creditor’s checklist

1. Notify the Public Trustee in writing as soon as you learn of the death, with the deceased’s full name and the amount claimed.
2. Lodge a proper claim by affidavit or statutory declaration, with your documents attached.
3. Keep your address current with the Office and record the date of every letter.
4. If you receive a notice of refusal or non-receipt, diarise six months from that day.
5. Take advice well before that deadline about instituting proceedings.