California Probate: Creditor Claims
After the death of an individual, probate court allows unsecured creditors to demand payment from the deceased individual’s estate by filing a creditor’s claim. A secured creditor can enforce their lien rights without needing to file a creditor’s claim. However, for an unsecured creditor to obtain payment, they must follow certain procedures in a timely manner. Failure to follow the laid-down procedures in a timely manner can result in a creditor losing their opportunity to receive their payment.
According to California Probate Code Section 9000(a), a creditor claim is a payment demand for any of the following, whether accrued or not accrued, due or not due, liquidated or unliquidated, and whether contingent or not contingent:
- Liability of the decedent, whether arising in tort, contract, or otherwise.
- Liability of the decedent’s estate for funeral expenses of the decedent.
- Liability for taxes incurred before the decedent’s demise, whether assessed before or after the decedent’s demise, other than assessments secured by real property liens and property taxes.
Giving Notice of Administration to Creditors
In California, the executor of a decedent’s estate is required by law to give proper notice of administration of the decedent’s estate to the decedent’s known or reasonably ascertainable creditors. The notice of administration must be delivered to a creditor pursuant to California Probate Code Section 1215.
According to California Probate Code Section 9051, the notice of administration is to be given to the creditors within the later of:
- Four months after the date on which letters are issued for the first time
- Thirty days after the personal representative/executor first has knowledge of the creditor
Even if an executor learns about a creditor after the expiration of the four months, they must give the creditor the notice.
How Are Creditors Supposed to File Claims in a California Probate?
According to California Probate Code Section 9100(a), a creditor is required to file a claim within the later of:
- Four months after the date on which letters are issued for the first time to a general executor
- Sixty days after the date on which the notice of administration is given to the creditor
A creditor is required to file their claim with the California probate court. Once a creditor files their claim, they must serve the decedent estate’s administrator with a copy of the claim within the later of;
- Thirty days of the filing of their claim
- Four months after letters are issued to an executor with general powers
If an administrator or executor is appointed after a creditor has filed their claim, the claim must be served on the newly appointed administrator or executor.
Can an Executor Reject a Creditor Claim?
A California administrator or executor has the power to allow or reject a creditor claim in whole or in part. After receiving a copy of a creditor’s claim, an executor files the allowance or rejection of the claim with the California probate court and then gives the creditor a notice. Suppose an executor rejects a creditor claim. In such a case, the creditor can bring a civil action on the claim. A creditor can also bring a civil action on the claim if they feel the payment being offered to them is insufficient.
Contact a California Probate Lawyer
If you want to know more about creditor claims or need help with the California probate process, contact the dedicated California probate attorney, Robert L. Cohen – The Probate Guy – today to schedule a free telephonic consultation.