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South Carolina Probate Law

The decedent, who died on May 23, 1982, was overpaid $5,522.80 in Social Security benefits. The evidence of record showed that the decedent's estate was probated in South Carolina and that its assets, which totaled $77,070.70, were inherited by R, who was also executor of the estate. When the Social Security Administration (SSA) asked R on March 30, 1983, to repay the overpayment incurred by the decedent, he refused, contending that he was not liable for repayment inasmuch as the estate had been closed and its assets had been distributed prior to his receiving notification of SSA's claim. South Carolina's nonclaim statute provides that claims of creditors against an estate will be barred if they are not notified with the executor, administrator, or probate judge within five months after the first publication of notice to the creditors.

Moreover, in Delaware v. Irving Trust Company, 92 F.2d 17 (2nd Cir. 1937), the Court decided that fiduciaries are not personally liable under § 192 (now 31 § U.S.C. 3713) where they pay creditors other than the United States if, at the time they made these payments, they were unaware that the person they represented owed money to the United States. Nonetheless, legatees of an estate, including a legatee who may have been the estate's executor or administrator, may be sued individually (in their capacity as legatee, but not in their capacity as fiduciaries) for recovery of funds due the United States, since the Supreme Court decided in United States v. Summerlin, 310 U.S. 414, 60 S.Ct. 1019 (1940) that claims of the United States are not barred by State nonclaim statutes. Held, the right of the United States to regain improper payments from residuary legatees is barred neither by State nonclaim statutes nor by 31 U.S.C. § 3713. Therefore, R is liable individually, but not in his capacity as the estate's executor, for repayment of the overpayment incurred by the decedent.

The decedent died on May 23, 1982, leaving an outstanding Social Security debt of $5,522.80. His estate was probated through the State of South Carolina and was closed on December 20, 1982. An accounting, dated March 11, 1983, showed that assets of the estate totalling $77,070.70 were inherited by the legatee, R, who had also served as executor of the estate. When SSA asked R on March 30, 1983, to repay the overpayment incurred by the decedent, he refused, contending that he was not liable for repayment inasmuch as the estate had been closed and its assets had been distributed prior to his receiving notification of SSA's claim.

The Code of Laws of South Carolina contains what is known as a nonclaim statute. Statutes of nonclaim are normally considered to be those statutes, usually found in the Probate Court, fixing the time within which claims against a decedent's estate must be filed or presented to the executor or administrator, and which usually further provide that the claims will be barred if not presented within such time. 34 ALR.2d pp. 1004-1005, § 1. The South Carolina nonclaim statute, set forth at § 21-15-640 of the Code, provides that claims of creditors against an estate not filed with the executor, administrator, or probate judge within five months after the first publication of notice to the creditors will be barred. As interpreted by the South Carolina Supreme Court in Moultis v. Degen, 279 S.C.1, 301 S.E.2d 554 (1983), the legislature intended to bar after five months all claims other than those specifically exempted. The specific exemptions which are not barred are "obligations secured by mortgages or other liens which have been duly recorded prior to the expiration of such period."

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