Are family members responsible for debts when someone dies who lived in California or who has property in California? What happens to unpaid credit cards, medical and hospital bills, the mortgage, the rent, taxes, recurring bills, and the like, when you die?
If you leave an estate that is solvent, the estate will pay the expenses of a last illness and any debt. Before any distributions are made to beneficiaries, the personal representative (executor, administrator, or trustee) will be the one to pay the debts from the estate’s assets. A solvent estate is one where the value of the assets is more than the debts.
If the estate is not solvent, it means there are not sufficient assets to pay all your debts when you die. If there are sufficient assets to pay some of the bills, the bills will be paid in a certain order. That order of payment is as follows:
1. Expenses of administration
2. Secured obligations such as mortgages and judgment liens
3. Funeral expenses
4. Expenses of last illness
5. Family allowance
6. Wage claims
7. General debts.
If there are insufficient assets to pay all the bills, the beneficiaries will not get a distribution and they will not be responsible for paying any of the debts unless other circumstances exist. For example, if a beneficiary or some other individual co-signed on a loan with you or was a guarantor, that is a contractual obligation which will make the co-signer or guarantor liable for the debt. Without some contractual obligation however, family members are not liable for your debts. Even spouses are not liable for a debt that was solely their spouse’s.
Talk to a California probate attorney about these and other questions regarding death and taxes. Call Mitchell A. Port at 310.559.5259 to speak to an attorney experienced in California probate law.