Insolvent Estates in California: Who gets Paid?
Many estates have been affected by the real estate crisis in California. For many people, the most valuable asset in their estate is their family home. However, as a result of the economy, the fair market values of properties have dropped. It is not uncommon for relatives of the decedent to find out the home was in foreclosure or underwater after their death.
When the decedent's most valuable asset, their home, is in foreclosure the estate is likely insolvent. This means there are insufficient assets in the estate to pay off all the decedent's debts. In California, debts are paid in order of priority pursuant to California Probate Code ยง11420. Administration debts such as attorney fees and executor fees are paid first. Then comes secured debts like the mortgage payments. This is followed by funeral expenses, expenses of last illness, family allowance wage claims and last general debts.
Sometimes the most difficult part of the process is finding a competent attorney who will handle the probate for an insolvent estate. For more information about Probate in California contact an experienced California Probate Attorney.