How Debts Are Handled in California Probate
How Debts Are Handled in California Probate
When a loved one passes away, their estate often goes through a process called probate — a court-supervised procedure for settling the deceased person’s affairs. One of the key aspects of probate in California is determining how outstanding debts are handled. Understanding this process can help families and executors avoid unnecessary delays and complications.
Identifying and Notifying Creditors
During probate, the executor or personal representative must identify the decedent’s debts and notify creditors. California law requires formal notice to known creditors and publication in a local newspaper for unknown creditors. Creditors typically have four months from the date letters of administration are issued to submit their claims.
Paying Valid Debts
Once creditor claims are received, the executor reviews and validates them. Valid debts are paid from the estate’s assets — not from the executor’s personal funds. Common debts include mortgages, credit cards, medical bills, and personal loans. However, not all assets are subject to debt repayment. For example, life insurance proceeds and retirement accounts with named beneficiaries usually pass directly to those beneficiaries and are protected from creditors.
What Happens If the Estate Is Insolvent?
If the estate’s debts exceed its assets, California law dictates the order in which debts must be paid. Priority typically goes to administrative costs, funeral expenses, and taxes before other unsecured debts. In these cases, some creditors may not be fully paid, and beneficiaries might not receive an inheritance.
Resolving Disputes and Closing the Estate
Disputes can arise if creditors challenge the executor’s decisions or if family members disagree over which debts should be paid. The probate court oversees these issues and ensures that debts are resolved before assets are distributed. Once all valid debts and taxes are paid, the remaining assets can be distributed according to the will or California intestacy law.
At Lane Law Group, Inc., we can provide legal assistance to the California public. Our firm helps executors and families navigate the probate process, ensuring debts and estate matters are handled properly and efficiently.
