Detailed Answer
When administering a California probate estate, an executor (personal representative) must confirm that the estate holds sufficient liquid assets before approving or paying any creditor’s claim. Confirming available funds helps ensure proper payment, protects beneficiaries, and shields the executor from personal liability for unauthorized distributions.
1. Review the Estate Inventory
Under California Probate Code §8800 et seq., the executor must inventory and appraise all estate assets. This inventory provides a clear snapshot of cash, bank accounts, and easily converted assets.
2. Provide Notice to Creditors
Pursuant to Probate Code §9100 (link), the executor must publish and mail notices to known creditors. Creditors then have four months to submit validated claims.
3. Verify and Classify Claims
Once received, the executor reviews each claim for accuracy, timeliness, and legal sufficiency. Valid claims must be classified according to priority rules under Probate Code §11420 (link).
4. Confirm Available Funds
Before paying any claim, the executor should reconcile the estate’s bank statements and cash on hand. If funds fall short, the estate may be insolvent and must follow the statutory priority of payments. Paying beyond available assets can expose the executor to personal liability.
5. Follow Statutory Payment Order
In an insolvent estate, debts are paid in the following order: funeral expenses, administration costs, family allowances, taxes, secured claims, and then general unsecured creditors (Probate Code §11420).
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance tailored to your situation.
Helpful Hints
- Open a dedicated estate bank account to track receipts and payments.
- Use detailed ledgers or accounting software to monitor cash flow.
- Keep copies of notices and proof of service when notifying creditors.
- Review Probate Code §9100 and §11420 to understand claim deadlines and payment priorities.
- Consider hiring a probate attorney or accountant if the estate holds complex assets.