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Insolvent estate with money owed. California

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  • Insolvent estate with money owed. California

    My father passed away with no will, no life insurance, and no spouse. His only assets are a car and a few hundred dollars in an account. He did not leave enough money to cover attorney costs, so I am trying to handle his estate myself and avoid probate since his assets are less than $100,000. At the time of his death, he had a balance with a few companies (credit cards and phone). Can I simply tell them that the estate is insolvent? Can I use his money to pay for his funeral costs or does it have to go to the creditors? If it goes to the creditors, who do I have to pay first (since there is not enough liquid assets to pay everyone)?

  • #2
    An attorney might save you later grief after the funeral

    Originally posted by preguntasabound View Post
    My father passed away with no will, no life insurance, and no spouse. His only assets are a car and a few hundred dollars in an account. He did not leave enough money to cover attorney costs, so I am trying to handle his estate myself and avoid probate since his assets are less than $100,000. At the time of his death, he had a balance with a few companies (credit cards and phone). Can I simply tell them that the estate is insolvent? Can I use his money to pay for his funeral costs or does it have to go to the creditors? If it goes to the creditors, who do I have to pay first (since there is not enough liquid assets to pay everyone)?
    Sorry to hear the news of your beloved father passing.

    You should consider a competent attorney regarding your questions and concerns. In spite of your conservative approach in trying to avoid paying an attorney, it might be wise to consult an attorney in this matter. By using an attorney, you might shield yourself from an attack from your father's creditors claiming that you misused the funds of the estate. Typically, funeral costs within a reasonable amount are paid first from an estate. The California attorney can tell you whether this applies in California and the amount.
    Last edited by DrumMajorChange; 10-20-2009, 01:23 AM.
    I am not an attorney. My personal opinions are not legal advice.

    "The only thing we have to fear is fear itself." --- Franklin Roosevelt

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    • #3
      Originally posted by preguntasabound View Post
      My father passed away with no will, no life insurance, and no spouse. His only assets are a car and a few hundred dollars in an account. He did not leave enough money to cover attorney costs, so I am trying to handle his estate myself and avoid probate since his assets are less than $100,000. At the time of his death, he had a balance with a few companies (credit cards and phone). Can I simply tell them that the estate is insolvent? Can I use his money to pay for his funeral costs or does it have to go to the creditors? If it goes to the creditors, who do I have to pay first (since there is not enough liquid assets to pay everyone)?
      You know, this is my field, and the State that I work in, but unfortunately I am not one hundred percent certain that the rules that apply with a formal probate also apply to informal small estate transfers. This field is fraught with technicalities and I can't answer your questions directly; it would take forever and frankly I do not know - most Attorneys handle the rules for formal probate proceedings and rarely come across these problems.

      In any case, I do have a few points I can make, but these are general points and they have exceptions:
      - If you receive property as a beneficiary of a formal probate proceeding then you tend to receive it after a creditor's claim period occurred, and after a Court ordered the distribution of same. You are usually safe.
      - If you received property via a 13100 Affidavit procedure then you are absolutely and positively liable for the debts of the deceased up to the amount that you received.
      - If you received property as a joint tenant (i.e. deceased person was a joint tenant on a property with you, now he's not since he's dead, while you remain), often times the property is not subject to decedent's debts.
      - If you received property as a contractual right (i.e. with life insurance, IRAs, Pay-On-Death Accounts, some others) then you often receive the property without liability to the decedent's creditors.

      One common exception to the joint tenancy/contractual right exclusion of creditor liability is if the decedent created the joint tenancy/contract to defraud creditors. There may be other exceptions, like I said this is a tricky and sometimes uncertain portion of probate law.

      Wish I could be more helpful.
      Website: www.jeterprobatelaw.com

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