- Probate. When a person dies with assets that aren’t held in a trust their assets are placed into the administrative process of a probate court. The probate process is intended to provide an orderly way for creditors of the deceased person to make claims against the assets in an estate. The estate’s personal representative, who may be a family member of the deceased or the deceased’s lawyer, is responsible for notifying creditors of the estate about when and where hearings will be held to resolve claims.
- Trusts. A trust is a type of legal entity that some people use to shield assets from estate taxes and, potentially, creditor claims. A common form of trust, the revocable living trust, does not protect assets from creditors. But high net worth individuals often set up more supplicated vehicles, like spendthrift or “domestic asset protection” trusts, which provide a more airtight protection against creditor claims on property left in the trust for a period of time.
- Tight deadlines. Public policy demands that estates be settled reasonably quickly. That means that deadlines for making claims against an estate can be quite tight. For example, unless otherwise permitted by the court a creditor who receives notice of an estate going into probate has only 90 days from the date of notice to file a claim. NRS 147.040.
- Restrictions on continuing lawsuits. A plaintiff against a deceased defendant must comply with all of the rules that apply to a creditor in probate. What’s more, a plaintiff in an ongoing lawsuit against someone who dies must show “good cause” for the lawsuit to continue against the estate in probate. NRS 147.100.
- Other creditors. After someone dies there are often a range of creditors who will seek to claim a part of the deceased’s estate. Lenders for mortgages and education costs will have sophisticated help at their disposal to protect their interests. The injured plaintiff must have good representation to compete with these behemoths.
- Fraudulent transfers. If the deceased person tried to shield assets from the injured plaintiff’s claim by giving them away—for example, by gifting a large chunk of money to a child—the plaintiff will need to bring the transferees of such assets into the case to seek recovery of the assets that, in legal terms, were fraudulently transferred (that is, transferred to avoid being subject to the plaintiff’s claim).
- Out-of-state assets. Quite often someone who dies will own property outside of Nevada. Pursuing claims against those assets can involve working with local counsel in other states to ensure that local rules are satisfied.
Someone who is seriously injured by another person’s negligent or reckless behavior is hopefully able to recover compensation. But if the responsible person dies before a case is resolved, the injured person may need to sue his or her estate. In some ways an estate is just like any other defendant, but lawsuits against estates involve some special issues. At the most basic level, after someone dies their assets are generally used to pay off the deceased person’s debts, with anything left over going to the person’s heirs. Past this basic framework, however, an estate can be quite complicated. Here are a few potential issues a plaintiff may face: