Detailed Answer
When a decedent’s estate lacks sufficient liquid assets to cover valid creditor claims, the personal representative must seek court authorization to sell estate property. First, the representative opens probate by filing a petition for probate with the California Superior Court. Once appointed, the court issues Letters Testamentary or Letters of Administration, granting authority to manage estate assets.
Notice to Creditors: Under Probate Code §9100, the personal representative must publish a Notice to Creditors and mail notice to known creditors within 30 days of appointment. Creditors then have four months from the date letters are issued to file claims (§9150).
After the claims period ends and the court allows or rejects claims, the representative may need to liquidate assets to satisfy valid debts. To initiate the sale of estate property:
- File a Petition for Order Authorizing Sale of Estate Property with the probate court under Probate Code §10300 (personal property) or §10351 (real property). Include details of the asset, proposed sale price, and any required appraisal.
- Serve notice of the petition on beneficiaries and creditors in accordance with Probate Code §10354. For real property sales, also mail a notice and post it on the property per §10316.
- Appear at the court hearing. The judge reviews the necessity of the sale, the fairness of terms, and compliance with statutory requirements.
- Obtain a court order authorizing the sale. Once granted, execute the sale documents and deposit proceeds into the estate’s bank account.
- Use sale proceeds to pay allowed creditor claims. If the court requires an accounting before distribution, file it under Probate Code §10900. After approval, distribute remaining assets to beneficiaries.
Keep in mind the priority of claims and any exemptions available to the decedent’s family under Probate Code §700 et seq..
Helpful Hints
- Obtain professional appraisals to support the proposed sale price.
- Track all service deadlines and confirm proper notice to avoid delays.
- Maintain organized records of claim adjudications to determine which debts require payment.
- Review local court rules for filing procedures, hearing requirements, and fees.
- Consider negotiating with creditors to potentially avoid selling estate property.
Disclaimer: This article provides general information on California probate procedures. It does not constitute legal advice. For guidance specific to your situation, consult a licensed attorney.