Potential Probate Expenses
Probate involves the court-supervised process of settling a decedent’s estate. California state law creates a formal and informal process of administering the decedent’s estate. Small estates (valued under $166,250) do not go through the full probate process. Administration of estates greater than $166,250 in value usually takes between 8 to 12 months.
During the probate process, creditor claims may arise against the estate. Such claims may include estate administration expenses, unpaid tax debts, or loans owed to individuals or financial institutions. Before beneficiaries and heirs receive their distributions of remaining assets in the estate, the executor or administrator must pay certain debts in a particular order. Those debts take the following precedence: the decedent’s funeral expenses, federal taxes, state taxes, and hospital bills. Sometimes, homestead exemption options exist for certain payments. The administrator takes responsibility for identifying this type of situation as well. If you are not a probate expert, then you may wish you had some type of professional guidance in this type of situation. If you don’t need legal advice, A People’s Choice is a great choice to get through the document preparation and case management process.
How People Accrue an Estate Administrative Expense in Probate
From time to time, the appointed executor or estate administrator may use their personal funds to pay the decedent’s expenses. The common law allows for the estate to pay the representative to prevent unjust enrichment. Repayment of such expenses usually occurs at the closing of the estate (estate taxes take precedence). Local court rules should provide further instructions on estate representatives on how to handle reimbursement. For example, Contra Costa Local Probate Rules states the following:
Claim vs. Estate Administrative Expense in Probate
(1) The Court will not approve “creditors claims” which represent obligations of the estate arising after the death of the decedent (except reasonable funeral expense). Such expenses are an estate administrative expense in probate, not a creditor’s claims, and may be included for approval in the account or report.
(2) The Court will not approve “creditors claims” which are requests for reimbursement by the person who paid what may otherwise have been a creditor claim. These are claims for equitable subrogation and may be included for approval in the account or report.
What is “Unjust Enrichment”?
The court defines unjust enrichment as a situation in which someone in probate used the process to gain benefits they did not deserve. Essentially, the term means the administrator used unfair means to their own gain.
However, the probate process is not always an easy one. Sometimes you may end up making payments from your personal funds to smooth the process. As a result, you now have an administrative expense in probate. When this happens, filing for compensation becomes perfectly reasonable. However, if your claim falls under equitable subrogation, then you may need to follow a different process. A People’s Choice can help you file a creditor’s claim for compensation.
Distributions and Compensation
Once the administrator has handled payment of creditor claims against the estate, they will distribute the remainder of the assets. Administrative expense in probate falls under those claims. Since the court authorizes payment of other debts following payment of state and local taxes, prepare to file your documentation so you receive payment as well.
Gather the estate assets and have them appraised. Then, notify all interested parties (usually the heirs and beneficiaries) that the estate is ready for distribution. Finally,once you complete that process, you may conclude probate. However, your expenses matter as an executor or administrator. Work with A People’s Choice to get more information on submitting claims for administrative expense in probate or equitable subrogation. We can help you prepare the forms you need. We also offer full probate document preparation and case management services for executors and personal representatives. Call us today at 805-648-5540.
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