Estates, which are made of the assets of the decedent, are considered a legal entity under state law. This legal entity is designed to conclude the decedent's financial affairs and transfer his property to his beneficiaries and heirs. State law governs estate and litigation rules; therefore, it is important to seek the advice of legal counsel in order to comply with any special rules. For example, in response to the recent foreclosure epidemic, Wyoming recently passed a law governing the foreclosure process when the homeowner has died.
Lawsuits by Beneficiaries
Estates themselves can be sued for a variety of reasons during the administration of the estate. Beneficiaries and heirs may view the expenses and costs of administering the estate as unreasonable, which can be a cause to sue the estate or executor. Beneficiaries and heirs may also bring a case against an executor who engages in other wrongdoing, such as taking money from the estate or not following the will's instructions.
Lawsuits by Creditors
Creditors can also make claims against the estate for outstanding amounts owed. They must follow state law, which may require making a claim against the estate in probate court prior to filing a lawsuit. Moreover, who incurred the debt may affect how the suit is filed. States like California differentiate between debts incurred by the decedent and debts incurred by the executor administering the estate.
Continuation of a Case Against the Decedent
Sometimes an estate becomes implicated in a case because the decedent died as the matter is going through the courts. When this occurs, the estate essentially steps into the decedent's shoes, and the estate cannot be settled until the claims have been determined in the lawsuit. Additionally, someone can sue the decedent if his death created a claim for that individual. For example, if the decedent died in an accident that he caused and injured another person, that person generally could sue the estate.
Estates Can Initiate Cases
Not only can estates be sued, but estates can also initiate litigation. Estates are subject to the same litigation rules as other claimants. For example, the estate of the late Michael Jackson was able to sue the operators of a website for improperly selling merchandise with Jackson's likeness without permission from the estate.
Rules Applicable to Estate Litigation
Though many of the rules are the same with respect to suing an estate versus a person, some rules are different, given the nature of an estate. Many states have a shorter time period in which potential claimants can make a claim against an estate. Due to the complexities involved in litigation relating to an estate, it is imperative to consult with counsel.
Read More: Estate Administrator Duties