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Your rights when an estate doesn’t pay back a valid debt

On Behalf of | Dec 8, 2022 | Estate Planning |

Maybe you are an individual who secured a judgment against someone who hurt you in a drunk driving crash and have slowly collected on those funds for multiple years. Perhaps you help run a business that provides financial services and therefore has to collect on outstanding balances when people fall behind on their payments.

Typically, the easiest way to collect money from an individual is to reach an agreement with them and enforce it, although the courts can assist you by granting you a judgment if they don’t make payments as they should in good faith. However, especially when the amount owed is substantial, sometimes people die without fulfilling their financial responsibilities to others.

As a creditor, you can potentially make a claim against someone’s estate when they die. Doing so may be the only remaining option to secure repayment. What if the executor of an estate either doesn’t properly notify you or distributes assets without paying you?

Sometimes, you can hold an executor accountable

The executor or appointed as the personal representative of an estate by the California Probate Court must comply with state law and seek to fulfill the testator’s obligations, as well as their last wishes. In fact, their financial responsibilities to others will typically have priority over the instructions they provide to distribute their assets to friends and family members.

If the executor fails to send you appropriate notice or decides to distribute property to others instead of paying you and other creditors, they may end up personally responsible for the remaining amount owed to you or your business. Although they won’t be responsible if the testator died leaving far more debts than they had assets to repay, they could be responsible when they mismanage estate resources.

Giving property to beneficiaries before they pay you or paying lower-priority creditors first might leave an executor with personal liability for the debts they did not pay. Obviously, bringing a claim against an executor in probate court will typically require litigation. Knowing your rights related to debt collection during estate administration can help those who need to initiate probate litigation to collect on a debt owed by someone who recently died in California.