Creditors May Want to Get Involved in the Distribution of a California Estate

At first sight, the list of property left by the deceased may look substantial, and it is certainly worth the effort of managing its distribution in an orderly manner.

Yet, California probate law will require the personal representative, as soon as he or she has finalized the Inventory and Appraisal Form (the detailed list of the decedent’s property), to find out how much the decedent owed to creditors at the time of his or her death. Only after all creditors’ claims are known can the value of the estate truly be appreciated.

At the very start of the California probate process, the Notice of Petition to Administer Estate is published in local newspapers and is the first indication to creditors that they should come forward with their claim. Once the inventory has been made of all the decedent’s assets and no later than four months after the Letters Testamentary have been issued, the personal representative sends a Notice of Administration to Creditors to every known or suspected creditors to advise them how and where to file a claim.

If the personal representative has requested authority to administer the estate under the Independent Administration of Estates Act, he or she may make all the decisions regarding the payment of outstanding debts without court supervision.

Expenses and obligations that arose after the decedent’s death do not require formal claims by creditors. This is also the case for tax bills, mortgage loan debts, or debts already evidenced by bills or invoices in possession of the personal representative.

Any claim by a creditor may reduce the net value of the estate to be distributed. It is, therefore, crucial for the personal representative to find out all known and potential creditors that might have a claim against the estate by searching through the decedent’s records and files looking for statement of accounts, correspondence, mortgage loan documents, bank statements, credit card statements, etc.

Talk to San Diego estate planning and probate attorney Scott Grossman about your situation and the questions you have. Call our lawyers at (951) 683-3704 or (866) 840-0000 for your FREE 30-minute telephone consultation. Also, order our FREE book The Insider’s Guide to California Probate and Trust Administration.