Frequently asked questions about paying the debts of an estate

Acting as the executor or administrator of someone’s estate is rarely an easy task. They are entrusted with important tasks that must be carried out for assets to distribute as the deceased intended. One of those tasks is paying off any debts attached to the estate. 

If someone is unfamiliar with the process, they might have many questions, such as:

How do I notify the deceased’s creditors?

The administrator of the estate fills out the Notice of Administration to Creditors (Form DE-157). The reverse side of the form includes a Proof of Service By Mail section – a crucial step. The same person cannot fill out the Notice and mail out the forms. The administrator of the estate must have someone mail the forms for them.  

Which creditors or potential creditors must be notified?

In California, any creditors that are either “known or readily ascertainable” must be notified of the deceased’s passing. Administrators should look for doctor’s bills, utility bills, and credit card accounts that might require payment. Other creditors may not be as obvious, such as a relative who lent the deceased person money in the past. The administrator should also send notice to these people, in case they have a claim.

How are creditors paid?

Generally, once the administrator approves a creditor’s claims they use the estate’s assets to cover the debt. It is especially important for the administrator to approach this process with care because creditors can hold them personally liable for mistakes or negligence. In some cases, they might need to sell certain assets to pay off creditors.

Anyone tasked with administering someone’s estate can benefit from the guidance of an estate and probate attorney. They can aid in finding and notifying creditors, so the process of distributing the estate can keep running smoothly.