You have been appointed executor. The estate may have unpaid debts. California law sets out duties for handling creditor claims before you distribute assets. Taking the right steps can help you address valid debts while protecting the estate from improper payments.
Identify estate debts
Gather bills, contracts and account statements. Review credit cards, mortgages, medical bills and loans. You should also look for any other unpaid obligations of the estate. These records can help identify what the estate owes.
Give creditors required notice
California law requires you to notify known or reasonably ascertainable creditors. This is separate from the general publication notice required during probate.
Generally, you must give the required notice by the later of four months after letters are issued or 30 days after you first learn of the creditor, subject to exceptions under California law.
A creditor generally has two possible deadlines to file a claim. The first is four months after letters are issued. The second is 60 days after you mail or personally deliver the Notice of Administration. The creditor may use whichever deadline falls later.
Pay debts before distribution
Not every claim must be paid. Review each claim to confirm the debt is valid, the amount is correct and the creditor has provided supporting documents. You may ask for additional proof before deciding.
Once you have reviewed valid claims, address estate debts before distributing assets. California law sets this priority in California Probate Code § 11420:
- Expenses of administration
- Secured obligations, to the extent payable from the property securing them
- Funeral expenses
- Expenses of last illness
- Family allowance
- Wage claims
- General debts
You cannot pay lower-priority debts until you pay higher-priority debts in full. If the estate cannot fully pay a class of debts, you generally pay each debt in that class proportionately.
Failing to follow these rules can harm the estate. In certain circumstances, it may also expose you to personal liability as the executor.
Protect your role as executor
Following California’s notice, claim and payment rules can reduce disputes. Keep clear records of creditor notices, claims and payments throughout the process. This can help you account for estate funds and document that you followed your duties. A probate attorney can help you understand your duties and handle complex creditor issues.