There's a contingent claim filed against my late relative's estate that hasn't become due or absolute yet — does the administrator have to hold back money to cover it just in case?

Reserving funds for a claim that isn't due yet

A claim does not have to be already fixed and payable to affect how the estate's assets are handled. Where the court is satisfied that a duly filed contingent claim is valid, it may order the executor or administrator to retain sufficient estate in hand to pay it once the contingency resolves and the claim becomes absolute, rather than letting the estate be fully distributed while the claim remains an open question.

What happens if the estate is insolvent

If the estate turns out to be insolvent, the reserve required is instead sufficient to pay the contingent claimant a portion equal to the dividend the other creditors receive, so a still-uncertain claim is not treated worse, or better, than the claims that have already been fixed, proved, and allowed by the court. That proportional approach keeps the contingent claimant in line with everyone else competing for a share of an estate that cannot fully pay everybody.

The court's satisfaction is a precondition

The order to retain funds is not automatic just because a contingent claim was filed; the section conditions it on the court being satisfied that the claim, though contingent, is valid. That means the claimant still has to persuade the court the claim has genuine merit before any of the estate's assets are held back on its account, rather than every speculative or unfounded contingent claim automatically tying up estate funds.

What this does not guarantee the claimant

The reserve secures funds against the possibility the contingency resolves in the claimant's favor; it does not itself establish that the claim will actually become absolute or that payment will ultimately be made. If the contingency never materializes, the retained funds are freed up for distribution to the heirs or other creditors, since the reserve exists only to cover the claim if and when it actually matures. Nor does the reserve requirement excuse the administrator from properly accounting for those retained funds; the retained amount must still be reported and administered as part of the estate until the contingency is resolved one way or the other.

Related provisions

• Rule 88, Section 4 — Estate to be retained to meet contingent claims
• Rule 88, Section 3 — Personalty first chargeable for debts, then realty