B-69787-O.M. May 2, 1979

B-69787-O.M. May 2, 1979

To: Director, Claims Divison

From: Deputy Comptroller General R. F. KELLER

Subject: Claim of Oda G. O'Brien, Z-2808141 - B-69787-O.M.

In informal dicussions between the Office of General Counsel and your Division, a question has arisen concerning the continued viability of B-69787-O.M., October 7, 1947, the third in a series of memoranda concerning the settlement of claims for amounts due the estates of deceased civilian employees and other public creditors. In B-55701-O.M., March 20, 1946, we said that claims by other than legal representatives involving amounts in excess of $1,000 shoudl be submitted for instructions. That was modified by B-58568-O.M., July 2, 1946, in which we said that claims for amounts greater than $1,000 but not in excess of $5,000 should continue to be submitted for instructions, bu that appointment of a legal representative should be required categorically where the amount exceeds $5,000. This position was modified further in B-69787-O.M., October 7, 1947, which concluded that the appointment of a legal representative should be required where the amount exceeds $3,000, but that claims for less than $3,000 may be allowed without requiring such appointment.

The present question stems from the claim of Mr. Oda G. O'Brien. Mrs. O'Brien is the widow of John T. O'Brien, who had received an award of $20,000 under the Federal Tort Claims Act. Mr. O'Brien died before the award could be paid. The check, which had been drawn payable jointly to Mr. O'Brien and his attorney, Mr. Robert V. LaBerge, could not be negotiated by the widow and was returned. Mrs. O'Brien subsequently filed a claim on Standard Form 1055. Counsel for the claimant points out that, under California law, formal administration is not required if the decedent leaves no real property and if the value of decedent's estate, with certain exceptions not relevant here, does not exceed $20,000. Counsel further asserts that decedent's only asset subject to probate was the subject $20,000 award, and that claimant would be entitled to the money under California's community property laws.

In reviewing the prior memoranda, it is important to note that State laws on descent and distribution have changed considerably since the 1940's. In B-59826-O.M., September 12, 1946, the existing position was justified as follows:

"It should be borne in mind that as a feneral rule all estates of decedents are subject to administration and that there is no other method provided by statute whereby the existence of creditors or heirs of decedent may be established conclusively and the estate distributed."

By virtue of changes in State laws, this statement to a large extent is no longer true. Many States now have provisions whereby formal administration is not required if the total estate subject to probate does not exceed a specified amount. In many average and smaller estates, real property and bank accounts are held jointly and there is little if any property subject to probate.

Upon reconsideration of the prior memoranda, we now believe there is no longer any reason to establish a fixed dollar amount, above which GAO would require the delay and expense of formal probate administration without regard to the requirements of State law. Also, claims for amounts due deceased civilian employees are to a large extent covered by statute. 5 U.S.C. Secs. 5582, 8705 (1976). In the futute, claims for amounts due the estates of "deceased public creditors," and deceased civilian employees except as otherwise provided by law, should be settled in accordance with title 4 of the GAO Policy and Procedures Manual for Guidance of Federal Agencies and the following principles:

(1) The portion of the 1947 memorandum which advised that claims not in excess of $3,000 may be allowed without requiring the appointment of a legal representative and without inquiring into State law appears to have caused no problem in the 30 years it has been in effect. Thus the same procedure should be continued for these claims.

(2) For claims larger than $3,000:

(a) Appointment of a legal representative should be required only if it is required b y the law of the State of the decedent's domicile at the time of death.

(b) If a claim is filed by someone other than an appointed legal representative, it is the claimant's burden to establish the (1) formal administration of the estate would not be required under State law, and (2) the claimant is the person properly entitled to payment under the laws of the decedent's domicile, including laws relating to the rights of creditors.

(c) Except as otherwise provided by law, if a claim filed by someone other than an appointed legal representative is allowed, payment should be made in accordance with the laws of the decedent's domicile.

(3) Advice may be sought from the Office of General Counsel whever there is doubt as to the propriety of payment in a particular case regardless of the amount involved.

Accordingly, B-55701-O.M., March 20, 1946, and B-58568-O.M., July 2, 1946, are hereby overruled. B-69787-O.M., October 7, 1947, is modified to the extent inconsistent with this memorandum. Mrs. O'Brien's claim may thus be settled without requiring an appointment of a legal representative.