Probate, Estate Planning and Trust Law
Law Offices of Alice A. Salvo  Law Offices of Alice A. Salvo
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Understanding the debt hierarchy of an estate

Most of the Woodland Hills clients that we assist here at The Law Offices of Alice A. Salvo who have been asked to serve as executors have little experience in estate administration. If you find yourself in the same situation, then you are probably concerned about the payment of any debts that your deceased family member or friend may have left behind. Are you expected to pay them? Is that handled through the probate court? All of these are questions which need answers, because certain liabilities against an estate must be settled before disbursements can be made to beneficiaries.

It is your responsibility as executor to ensure that the estate’s debts are settled. You may find instructional assistance through the probate court or an estate planning attorney. To begin this process, you first want to make any inventory of debts alongside the inventory of assets that you prepare for the estate. Once those have been identified, you will have an easier time determining which should be paid first.

The debt hierarchy of an estate is set forth in Section 11420 of the California Probate Code. It states that before any personal debts are repaid, payment must be made on any federal or state liabilities that the decedent may have incurred. After that, debt payments are due in the following order:

  •          Expenses related to the administration of the estate.
  •          Mortgage expenses or any debts or judgments secured by a lien.
  •          Funeral costs.
  •          Debts related to the deceased’s death.
  •          Disbursements to heirs and beneficiaries.
  •          Wage claims and general debts.

If the estate’s assets are not enough to cover its debts, it is left to the court to determine how much creditors will receive.

Further information on an executor’s role in repaying debts can be found on our site. 

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