If a loved one died here in California owing money, it’s essential to understand how to handle creditors’ claims on the estate. These claims have to be filed within a year after the death of the person who owed money. If that deadline is missed, a creditor’s claim is generally unenforceable.
If the estate has to go through probate, the claim is filed during these proceedings. If no probate or other court proceedings are required to settle the estate, a creditor has the option to open one to make a claim.
If an estate goes through probate court, it’s personal representative is required to notify any creditors that they can reasonably be expected to find and provide them with claim forms within four months. Creditors then have a minimum of 60 days to make a claim on the estate.
Estate representatives have the discretion of accepting or denying all or part of a claim. Creditors whose claims are denied may choose to sue in order to get the money, however.
What happens if the value of the estate after all estate administration fees and court costs is less than the amount that the decedent owed to creditors? The debts are then prioritized according to California law. For example, secured debts such as mortgages take priority.
Estate administrators may find it worthwhile to delay the settling of the estate until a year has passed if the deceased owed a significant amount of money that would have to be paid from the estate. However, it’s always wise to seek the guidance of a California estate planning attorney when dealing with any debts left by a loved one who has passed away. This can help you avoid unnecessary expenses and legal ramifications.
Source: Lake County News, “Estate Planning: Claims involving a decedent’s estate,” Dennis Fordham, June 02, 2018