When someone dies in California, both their personal property and their debts become part of their estate. What happens to those assets depends on the circumstances of the testator when they died, the instructions in their estate plan and California state law.
The executor of their estate will need to locate and collect their property for distribution and file the appropriate paperwork with the California probate courts. An executor also needs to settle someone’s financial responsibilities. This process may require notifying creditors and then paying them in full for whatever the deceased person owed.
Properly handling existing debts and balances on accounts held by the deceased person is a crucial responsibility for an executor.
Executors could be legally responsible for some unpaid debts
Plenty of people die with more money owed to others than assets in their name. If that situation applies to a California estate, then the executor must proceed carefully. They need to liquidate assets and repay creditors in the proper order of priority as established under California probate laws.
Even if they eventually have nothing left for the heirs and beneficiaries of the estate, they must do their best to repay all debts and account balances using estate assets before distributing property to others.
Failing to do so might mean that the executor is the one financially responsible for those debts. If there were assets distributed to beneficiaries instead of to credit, the executor may ultimately face claims from the creditors who did not receive payment in full.
Ensuring you understand the rules of estate administration in California can help you avoid potentially expensive mistakes.