Paying the deceased’s creditors is a big part of an executor’s responsibility. In fact, executors can end up with personal financial responsibility for any debts that go unpaid if creditors can show the estate had enough assets to pay them. If an estate does not have enough assets to pay off all of the outstanding debts, then the executor must handle the deceased’s debts in order of priority.
What are the top priority debts that can make claims against a California estate?
The estate must pay for itself first
Creditors ranging from banks to individuals with a judgment against the deceased party can bring estate claims in probate court. Once the courts validate the debts, the executor will then have to repay the remaining debts in order of priority. Government debts are the top priority, but following that, the estate’s administration expenses are the first category of priority under California probate law.
After that, debts that involve mortgages, deeds and liens comprise the next category of debts that an executor must pay. Next, funeral expenses and any medical bills from the last illness experienced by the deceased are paid. Then, the state permits the executor to pay a family allowance, followed by wage claims. Finally, all remaining general debts that do not involve a lien against the deceased’s real property must get paid in full before the executor can distribute the remaining assets to the beneficiaries.
Learning about the financial rules for probate can help with the administration of an estate. While it’s a big job, there is help available that can make the process much easier.