Decedents typically die owing a variety of unpaid debts. Probate acts as a legal clearinghouse for a decedent’s unsecured creditors to file claims demanding payment of a monetary liability (debt) owed them by the decedent.
In California, creditor claims are required to be filed regardless of whether the liability was due, accrued, contingent, or reduced to a cash value when the decedent died (Probate Code section 9000). Generally, most creditor claims must be filed in the probate court proceeding within one year of a decedent’s death (section 366.3 California Code of Civil Procedure). If necessary, a creditor may even commence a probate to file a timely creditor claim.
While the personal representative of a decedent’s estate is required to mail a notice of probate and creditor claim form to all reasonably ascertainable creditors, creditors should be vigilant. Any creditor aware that a debtor has died should enquire with the superior court in the county where the decedent resided whether a probate was commenced. Also, Petitioner’s seeking to commence probate are required to publish a legal notice in a local newspaper of general circulation in the county to put potential creditors on notice.
Once a creditor knows that a probate has commenced the creditor should notify the decedent’s personal representative and request a notice of probate and creditor claim. The personal representative has thirty-days from knowing of a creditor to provide the creditor a notice and creditor claim form.
In California, creditors must use the Judicial Counsel form DE-172 creditor claim form. The completed claim must be filed with the court overseeing the probate proceeding and be mailed to the personal representative and his or her attorney. The filed claim must also be timely and complete.
Timely means that the claim is filed either within four months after probate commenced – i.e., issuance of letters — or within sixty-days of when the notice of the probate was given to the creditor, whichever is later.
Creditor claims must be supported by a sworn statement of the creditor or his or her representative, e.g., debt collections company (Probate Code section 9151). First, if the claim is due when filed then statement must state that the amount is justly due, that no payments have been made that are not credited, and that there are no offsets. Second, claims that are not yet due – i.e., unmatured or contingent claims (including pending lawsuits against the decedent’s estate) — must be supported by affidavit showing the facts supporting the claim. Supporting documents can be provided.
The DE-172 has instructions. Creditors who complete their own creditor claim forms must do so carefully. An incomplete or inadequate creditor claim form invites rejection by the personal representative. If a creditor claim is partially or entirely rejected, the rejection typically starts a ninety day period for the creditor to file a timely lawsuit to dispute the rejection.
Only demands for monetary compensation require a creditor’s claim. Thus, claims that do not demand money, such as a demand for specific property, do not require a creditor claim. Also, secured creditors who claims are adequately secured by a lien do not need to file a creditor claim.
The foregoing discussion is not legal advice. Consult an attorney for guidance.
Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.