How Debts Are Handled in California Probate

When a loved one passes away in California, their estate often goes through the probate process. One key part of probate is determining how the deceased person’s debts will be handled. Creditors have rights under California law, and their claims must be addressed before heirs or beneficiaries can receive any inheritance. Understanding how debts are managed can help families avoid confusion and prepare for the probate process.

Identifying Debts

The executor or personal representative is responsible for gathering information about the decedent’s debts. This may include mortgages, credit cards, medical bills, and personal loans. They must notify creditors about the probate process, giving them an opportunity to file claims.

Creditor Claims and Deadlines

In California, creditors generally have four months after the appointment of the personal representative to file their claims. If they miss this deadline, their claims may be barred. Valid claims are paid from the estate’s assets before any distribution to heirs.

Priority of Payments

Not all debts are treated equally. California law requires certain debts and expenses to be paid first. These include probate administration costs, funeral expenses, and secured debts such as mortgages. After these, unsecured debts like credit card balances are addressed if sufficient assets remain.

What Happens If the Estate Can’t Cover All Debts?

If the estate does not have enough assets to pay all debts, California law dictates the order in which they are paid. Beneficiaries may not inherit anything if debts exhaust the estate. However, surviving family members are generally not personally responsible for the decedent’s debts unless they co-signed a loan or are jointly liable.

Protecting Assets and Beneficiaries

Navigating debt settlement in probate can be complicated, particularly when creditors are aggressive. Executors must carefully follow California’s probate rules to avoid personal liability. Beneficiaries may also want guidance if they are concerned about how debts could impact their inheritance.

At All Day Law, APC we can provide legal assistance to the California public. Whether you are serving as an executor or are a beneficiary, understanding how debts are handled in probate can make the process smoother and less stressful.