California Probate Debts And Creditors

California probate cases sometimes have creditors’ claims that compete with one another in terms of which one gets paid first. The priority for creditor payments is set by law under California Probate Code section 11420. That section provides the following priority list of debts and creditors who are to be paid one ahead of the other:

11420. (a) Debts shall be paid in the following order of priority among classes of debts, except that debts owed to the United States or to this state that have preference under the laws of the United States or of this state shall be given the preference required by such laws:

(1) Expenses of administration. With respect to obligations secured by mortgage, deed of trust, or other lien, including, but not limited to, a judgment lien, only those expenses of administration incurred that are reasonably related to the administration of that property by which obligations are secured shall be given priority over these obligations.

(2) Obligations secured by a mortgage, deed of trust, or other lien, including, but not limited to, a judgment lien, in the order of their priority, so far as they may be paid out of the proceeds of the property subject to the lien. If the proceeds are insufficient, the part of the obligation remaining unsatisfied shall be classed with general debts.

(3) Funeral expenses.

(4) Expenses of last illness.

(5) Family allowance.

(6) Wage claims.

(7) General debts, including judgments not secured by a lien and all other debts not included in a prior class.

(b) Except as otherwise provided by statute, the debts of each class are without preference or priority one over another. No debt of any class may be paid until all those of prior classes are paid in full. If property in the estate is insufficient to pay all debts of any class in full, each debt in that class shall be paid a proportionate share.

The executor, administrator, heirs and beneficiaries are usually not personally liable for the estate’s debts. The estate is liable for those debts. Usually, property remaining after all the appropriate creditor’s claims are paid is then distributed to those who are supposed to get the property.

Call an experienced probate lawyer in California to help resolve your probate matter. Call Mitchell A. Port at (310) 559-5259.