If you’re an executor or administrator of an estate, you’re probably wondering if and when you can pay people and creditors. And if you’re a beneficiary, you might be wondering when you can expect to get paid your inheritance.
California probate laws take the guess work out of who gets paid first in Probate. Probate is the process of marshaling assets, paying off debts, distributing assets, and finalizing the affairs of someone who has died. [See related article: "What does Probate Cost and Who Pays?".]
Order of Payment from the Estate
The California Probate Code lists the order in which people get paid in probate. The Personal Representative, or person administering the estate, must pay decedent's debts, expenses of administration, and charges against the estate in the following order:
1. Debts owed to the United States and/or to California. This includes sales and use tax, and personal income tax.
2. Administration expenses, which refer primarily to the costs and expenses related to probate court proceedings. This includes statutory fees for services rendered by the attorney and estate administrator/executor to probate the estate. This could also include expenses related to continuing the decedent’s business or preserving the estate’s property, like paying utility expenses for the estate’s real property or costs related to sale of a property.
3. Obligations secured by a mortgage, deed of trust, or another lien (including a judgment lien), in order of their priority, and only to the extent that the amount of the lien may be paid from the proceeds of the property subject to the lien. If the proceeds of the property are insufficient to satisfy the lien, the remaining unsatisfied amount will be classified as general debts.
4. Unpaid expenses, like funeral expenses, last-illness expenses, family allowance, and wage claims.
5. General debts, including unsecured judgments and all other remaining debts, get paid from the estate.
After the above obligations are met by the estate, the beneficiaries would then be paid their distributions from the estate according to California law.
Other Obligations of the Estate
There is also a 4-month waiting period for creditors to file claims against the estate. Only after the 4-month Creditor’s Claim period has expired can the Personal Representative file the First and Final Report. The Court will set a hearing date to approve or deny the First and Final Report.
If the Court approves the First and Final Report, the Court will then issue an order instructing the Personal Representative to pay the administrative expenses described above in 1-5 and, finally, distribute the remaining assets to the heirs or beneficiaries.
Looking For A Probate Attorney In San Diego? Contact us Now.
If you are looking for assistance on a probate or estate, we can help you seek legal recourse at Bellator Law Group. Contact us online or call us at (619) 232-8377 to schedule a consultation with an attorney.