What Rights Do Creditors Have Against a Decedent’s Estate During the Probate Process?
When someone passes away, their estate goes through the probate process. The probate process entails settling outstanding debts and taxes and distributing the remaining estate assets to beneficiaries or heirs. If someone owes debts at the time of their death, their debts do not disappear. When someone dies and leaves behind debts, those debts become the estate’s responsibility. The personal representative, the person in charge of administering the decedent’s estate, is required to use the decedent’s assets to pay off creditor debts.
Creditors, those to whom money is owed, have specific rights against a decedent’s estate during the probate process. Creditors can include, among many others, heirs, lenders, medical providers, credit card companies, and plaintiffs in tort cases. Understanding the rights creditors have against a decedent’s estate during the probate process is crucial for both personal representatives and creditors. Below, we discuss some of the rights creditors have against a decedent’s estate during the probate process.
- Right to Notification
One of the most crucial rights creditors have in the probate process is the right to be notified about the decedent’s death. It is the personal representative’s responsibility to provide this notice to creditors. A signed copy of a Notice of Administration to Creditors must be mailed to the creditor. The notice must also be published in a local newspaper. According to California Probate Code Section 9051, creditors must be notified of the decedent’s death within the later of four months after the Letters are first issued or 30 days after the personal representative knows of the creditor.
- Right to File a Claim
Notifying creditors of the decedent’s death starts the clock on the timeframe within which they can make claims against the estate. According to California Probate Code Section 9100, creditors must file their claims within four months after Letters of Administration are issued to the personal representative or 60 days after the notice was given to the creditor, whichever is later. However, the court may allow creditors to file late claims if they are not notified within the set time.
- Estoppel and Fraud Defense
This defense is available to prevent a party from making untrue assertions or going back on their word. For example, the personal representative might make a creditor believe they would receive their money without needing to file a claim. In such a scenario, imagine the personal representative did not intend to make any payment to the creditor. In such a case, if the creditor files a late claim, the personal representative would be stopped or forbidden from contesting the creditor’s claim on the basis that the claim is time-barred.
- Priority of Claims
In California, a priority system determines the order in which creditor debts are to be paid. The personal representative must follow the specified order when paying off creditors. In California, administration expenses must be paid first, followed by mortgage obligations and then funeral expenses. General debts, including unsecured debts, are paid after most other debts have been paid.
Contact a California Probate Lawyer
If you need legal guidance, contact the dedicated California probate attorney, Robert L. Cohen – The Probate Guy – today to schedule a telephonic consultation.
Southern California Probate Lawyer Serving Orange, Riverside, Anaheim, Whittier & Beyond.
Source:
leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB§ionNum=9051.
