0:02 Who are you?
0:05 >> [music]
0:05 >> And where are you going? What do you want? Hello and welcome to Trust and Estates Weekly. See, this is what happens when I take time off. So, I I took off Thursday afternoon and Friday to uh drive up to Fresno. A friend of mine was having her her big annual Halloween party. It's always a big bash and uh
0:38 >> [snorts]
0:38 >> and uh so I go up there and help her out and and you know, I didn't come back until uh yesterday evening and uh you know, trying to refocus back onto work. So,
0:51 >> [laughter]
0:52 >> So, this is Trust and Estates Weekly. It's Monday. It's 10:00 a.m. Pacific time. And we're going to talk about serious serious stuff here now. Serious stuff. Okay. Uh I I actually got to start out my day by having um a a creditor chastise me for not uh having sent her uh or not having recognized her claim and I sent her a copy of the appropriate form which we'll talk about in a moment and and and and uh you know, essentially wished her well.
1:28 >> [laughter]
1:29 >> Uh I got the the the the moral of the story is don't go on vacation. Even even even for a day and a half, don't go on vacation. Okay. [snorts] Well, so today I'm going to be talking about when an estate owes money, which is almost all the time. Uh very few people pass away not owing a penny. Now, I have talked before about priority of creditors' claims. Um but I don't think I've talked about the process that one has to go through in order to have that claim
2:06 recognized. Um it it well well well the I should say the process that one has to go through to ensure that one's claim is recognized because while some claims are recognized automatically, okay, other claims uh have to be recognized by the court. So, if if you recall uh well, if if you happen to see the episode on on priority of creditors' claims. So, if first of all, the uh claim for the personal
2:44 representative, me, right? Okay. I while I I don't I don't have to file file what's known as a creditor's claim. The by virtue of having been given letters of administration, it's understood by the court and it's part of the process that prior to the probate closing, I'm going to file a claim for fees and that indeed the the priority for that claim to be paid is first in line. And there's a good reason for that because if
3:20 if I um administered an estate and other creditors came ahead of me, I could end up having done a lot of work and never getting paid. Because once the assets of the estate are gone, there's no one else who has the obligation to to pay a personal representative, an administrator, an executor, etc. Right? And so that's why it's set up that way. By the way, the lawyer who represents me also has a number one priority claim for the same reason. So, I I I at this this party, a number of people asked, "What
3:55 do you do?" Oh, and then so I tell them and they say, "Oh, you're a lawyer." I said, "No. No, I'm not a lawyer. Nothing wrong with lawyers, but I'm not a lawyer. I do, however, have a lawyer who represents me. The lawyer handles the legal side of things. I handle the administration side of things. That's how the That's how the tasks are broken down, basically. And so again, if the lawyer's claim were not paid number one priority, no lawyer would agree to represent me and that would hamper, if not completely impede, the administration of the estate, okay?
4:30 So, uh secured claims. So, if if somebody dies and there's still a mortgage on their house or a loan on their house. So, the mortgage holder does not have to file a creditor's claim. That's a secured claim and it will be dealt with as part of the administration um of the estate. But if you have an unsecured claim, okay? So, let's say that you paid for some of the funeral expenses.
5:05 Or let's say you had lent the decedent some money. Maybe you have a note. Okay, so you have you actually the the the decedent before he died signed a note that's evidence of your claim. Good. Okay. Uh so, but that claim is but let's say there was no collateral for the debt. So, it's not a note secured by uh you know, some kind of lien on the um decedent's house or some other property has. It's not a car loan, for example. Those are the probably the two
5:40 most common debts estates deal with are home loans and car loans, okay? So, an unsecured debt has to file a creditor's claim, okay? So, I gave you two of the most common. One is somebody um you know, essentially advances money to pay funeral expenses and another is someone has some other type of unsecured debt. They lent somebody some money. And um you know, there was no collateral for it. It might have been a a loan between friends or business associates and so there's a high degree of trust
6:15 there. Uh but and then that's why they didn't require collateral. But but in the end uh you know, the person died and so now uh the the the creditor's claim has to be sustained by the court uh in order for it to be valid. Or not really the court per se, but it has to be sustained as part of the administration process. Okay, so that's that's what we're talking about here. Um I know like for my situation um I I have a couple of uh loans out to
6:50 friends right now who helped me during some difficult personal things that have happened in the last uh that that happened in my life over the last few years. And I made sure they all had notes, written notes that I signed uh you know, for the debts uh because if, you know, as as we say, God forbid, um I did uh die before they were paid back, um I wanted to make sure they had uh evidence that uh my estate uh you know, owed owed them the money and and that way it would be as easy as possible for them to get their claim paid. Okay,
7:27 so um I'm going to be going through the process here in California. The process is not identical in all 50 states, uh not to mention the you know, the various territories, Guam and Puerto Rico, etc. Uh but it's it it will be similar, you know, to this process. And so if you're in, you know, Alabama or you're in Ohio or you're in Idaho, it's, you know, I I would say, you know, go on Chat GPT or Perplexity or Claude, one of
8:03 the uh large language models, and just query, "What is the process for filing a creditor's claim in probate in whatever state that you're in." It's going to give you pretty cogent advice, okay? So, just to give you an idea, I used uh Chat GPT to prepare my notes uh for this uh for this particular episode and it gave me, let's see, eight steps, I think. Okay. Uh gave me nine steps. Step nine is special situation. So, it's So, it's
8:39 it gave me an eight what it an eight-step process for filing a creditor's claim here in California and then I reviewed it cuz you have to, okay? And it's absolutely correct, okay? So, uh you know, these these LLMs are getting much much better. Um if you're, you know, brand new to doing something like this, so uh you know, you you may not be able to double-check it, but as long as as long as the correct form is identified, okay? And you fill out the form and file
9:17 it with the court, okay? So, the good thing about the court is if a form is filed incorrectly, they'll either reject it for filing, at which case you can ask the clerk, uh "What did I do wrong?" and they'll they'll generally help you fix it. It's not their job to give you legal advice, but if it's something you filled out wrong on the form, they usually will help you. Or they will refer you to kind of a a section of the court that helps lay people with filling out forms that need,
9:53 you know, to be filed. So, I know here in again, here in Los Angeles in Superior Court, there is an office in the Superior Court where the people there their their whole job is to is to help non-lawyers fill out forms properly so that they can be filed with the court. Okay, so Um that's, you know, so but having this background will help you understand the overall process and then when you if if you do need to go file a creditor's claim and fill out that form or whatever, you'll be able to
10:29 do so more easily. Okay, so step number one is to determine whether you have a valid claim to begin with. So, a creditor is anyone owed money or property by the decedent at the time of death. Okay, now notice it's at the time of death meaning that the debt was incurred prior to the decedent dying. Now, contrast this with an heir, okay? An heir is not a
11:05 creditor. Okay? They were not entitled to any of that money prior to the decedent dying. What they're what they're entitled to after the decedent dies is whatever share of the estate has been given to them under a will or to which they're entitled by the laws of intestate distribution in the particular state in which the probate is occurring.
11:40 Now, in some cases an heir can be a creditor, too. Okay? So, let's say an heir, let's let's just take an example of a sister of the decedent, let's say she paid the funeral expenses. Okay? So, she's entitled to be to be reimbursed for those expenses, okay? But those expenses actually make her a creditor to
12:16 the estate. Now, you say, "Wait, I thought you just said it was money or property owed by the decedent at the time of death." Yes, however, uh there was no way to anticipate, you know, prior to the decedent's death that funeral expenses were going to need to be paid and so funeral expenses are actually are a higher priority claim than an actual unsecured debt. They they
12:51 nonetheless they they are processed as generally speaking they are processed as a creditor's claim, especially in an estate where uh there are disputes between the various heirs as to whom about to whom money is due or there's there's disputes about who is an a legal heir, etc., etc. In such cases, okay? Um an administrator would be insane to just go ahead and and reimburse
13:27 expenses without it going through the creditor claims process because if one of the other heirs disputes that claim, now the administrator could become personally liable for money that was paid in reimbursement, okay? So, so you you can see that um the the the creditor's claim process is there to protect the heirs first or the
14:03 estate really and and by extension the heirs, okay? But there and so and there is some discretion on the part of the administrator, okay? The as it an administrator, an executor, a personal representative, whatever we're going to call them, they are not required to take a step that might put them in legal or shall we say fiduciary jeopardy. Even though they may have the authority to do something, exercising that authority may put them
14:39 in a situation of of liability and so administrators always have the option of applying to the court for an instruction or for instructions. And in a situation like that, the proper way to do so may be the creditor's claim process, okay? Because it's already set up and indeed what the person is asking for amounts to getting a debt repaid. Okay, so uh okay, so and I I talked about
15:15 different types of creditor claims. Okay, so that's number one. So, determine if you have a valid claim, okay? Now, you may not be able to do that completely and so you may decide to file a claim and if it gets denied, okay, it gets denied. It's not very you'll see I'm going to show you the form in a in a little while. Uh you'll see it's not going to take you very long to fill out the form. Uh but um so it may be if if you think you have a valid claim even though it may seem a little bit debatable, you know, under
15:50 the law in this case and in this case in California Probate Code sections 9900 uh I'm sorry, not 900, 9000 through 9003, okay? So, uh and and it you know, frankly, while normally I would say, you know, talk to an attorney about this, you may say, "Well, but the claim's for $400. I'm going to spend $300 talking to an attorney to try and, you know, collect $400. It doesn't make sense." Yeah, I get it, you know, at that point you may just decide this is not me giving you advice as you know I don't give legal advice, but it may just be,
16:27 you know, more economic to go ahead and file a claim uh and and let the administrator, you know, figure it out and if it has to go through the court process, it'll, you know, it'll go through the court process and, you know, you can show up uh at the hearing, you'll be notified, you don't necessarily and if and if and on such a small claim if you show up without a lawyer, the parties are going to understand or anyway, the judge and the administrator is going to understand. By the way, if an administrator were to admonish you, "Why are you here without a lawyer when you're seeking a few hundred dollars?"
17:03 I I I I I don't know what to tell you. That that's just not a particularly smart administrator. It's obvious why you're there unrepresented and certainly the judge is going to is going to understand that. If if you think the judge doesn't, just say, "You know, your honor, the claim is only for $400. I mean, I I can't afford to spend you know, that or more trying to collect the debt. I might as well I would just might as well just have, you know, left it uncollectible, but it's a valid debt and so you know, I filled out the paperwork as best I can and I'm here this morning to
17:39 answer your questions and uh again, most people involved in the probate process, they're they're going to understand the situation in which you find yourself and they're going to seek to do whatever is the correct thing under the law and and that's going to be that, okay? So, all right, so determine whether you have a valid claim. Number two, identify the proper time frame for filing, okay? So, it is not an open-ended process, okay? So, creditor's claims in California need to be filed uh with
18:18 within 4 months after letters of testamentary or what are called letters of administration are first issued to the personal representative, okay? So, if letters, let's say letters were issued today, November 3rd, pardon me, 2025, so you would have until December, January, February, March, you would have until March 3rd, 2026 to file a claim, okay? So, 4 months. Or 60 days after the creditor receives a
18:55 notice under Probate Code section 9050, okay? So, if a creditor uh sometimes um you know, um uh a creditor is it doesn't know that the person has has died, okay? And so, you know, 6 months into the administration, they find out, "Oh my gosh, my my debtor has died, okay?" And okay, so then um they contact the administrator, uh notify him that hey,
19:31 they they, you know, the decedent owes owes money to them, okay? And then the creditor will give them notice, okay? Proper a proper legal notice. Now, in that case, they only have 60 days to file their claim, okay? Not 4 months, okay? And so, you know, we need you need to keep those deadlines in mind because if the deadline passes and you haven't filed the paperwork, then it's very likely that your claim will be barred. Okay, so
20:09 I have a I have an estate in Alabama that I'm administrating and um years well not yeah, I think it was actually over a year year year year and a half maybe after the the decedent died a credit card company I believe it was American Express filed a creditors claim. And the the claim was not timely filed. Okay, and so my lawyer contacted
20:45 American Express and said, hey, you know, your claim wasn't timely filed and American Express said, we don't care. We're going to fight it. Okay. I mean there's no money left in the estate, so good luck. Good luck with that. But my my lawyer is pretty confident the court is going to dismiss the claim because it was not timely filed. Okay, so that's that's not at all unusual. Okay, so so next is identify the proper time frame for filing. Number three,
21:21 request a notice of administration. Okay, so the the personal representative the the [clears throat] administrator has to send a written notice of administration to known or reasonably known creditors. That's the um those are the notices that I mentioned before when talking about the time frames. Okay, and the notice also informs the creditor where to file their claim. Okay, so here in California there is a essentially [clears throat] a probate court in each county, right? So here in
21:57 here in LA County there's actually we have actually more than one courthouse. Okay, so there's a courthouse in downtown. There's another one in the San Fernando Valley. So but but probate cases are heard only in the downtown court. Okay, so if someone files a creditors claim at the you know, San Fernando Valley uh you know, court of the Los Angeles Superior Court County of Los Angeles, that's that's not going to work. They have to file it in what's called the Stanley Mosk Court,
22:32 which is the downtown court of the LA Superior Court. Okay, so that notice will specify in you know, where which court uh which court the creditors claim has to be filed. Okay, so that's step number three. Let's let's take a break and we'll come back and talk some more. When life brings unexpected changes, managing inherited property shouldn't add to your stress. Magnum Properties specializes in probate and trust real estate management. We
23:09 handle the complexities while you focus on what matters most. From property maintenance to tenant relations, from legal compliance to maximizing value, we're your trusted partner through every step. Magnum Properties Inc. Turning property challenges into peace of mind. Call us today at 213-264-4396 or visit magnumprops.com. Okay, so this is Trusts and Estates weekly and I'm your host Kevin Bammel.
23:44 We're talking about when the estate owes money, what's known here in California as the creditor claim claims process, talked about determining whether you have a valid claim, identifying the proper time frame, that requesting and receiving a notice of administration. Okay, and so the next step, step number four is completing the creditors claim form. So I'm going to go ahead and share my screen here. And I think this is it. Yep. And there it is. Okay.
24:20 So let's let's make this larger so you can see it. No, it's doesn't want to do it. Okay. Well, I think that's that's as Oh, here it is. Here's the button I'm looking for. Oh, okay, it doesn't enlarge. All right, so that's as that's as large as it's going to get. Okay, so here's this is form DE-172 and you can see right here it says creditors claim. In California, this is the form you use for filing a creditors claim and you can see that I'm not going to go through every section, but this top part
24:55 is is really is really the relevant part. So attorney or party without an attorney. So you just put in your your name and address and then it's the court wants to know where you can be contacted, telephone numbers and fax numbers if appropriate. Okay, and that's that's what goes here. Now, if if it's an attorney filing it, then the attorneys clients name will go here, attorney for name. If if it's if you're filing on your own behalf, so you just put your name there. You're not an attorney, so you'd leave that blank. Okay, next you have the address of the Superior Court of California County of and in in this
25:32 example, you know, Los Angeles. Okay, street address, mailing address. Okay, city and zip code and branch name. I I mentioned Stanley Mosk. Okay. And then estate of. So what is the name of the estate? Okay, that's probate cases go by the name of you know, estate of and then the decedents full name. Okay, so you know, la habedius we say the estate of Kevin S. Bammel, you know, and here it says decedent. But it's also going to have a case number assigned to it and that case number is in some ways more important
26:09 than the case name. Okay, because the case number will always be unique. Okay, now up here you see it says for court use only. When you file this document with the court, it's going to be stamped here. It's going to be a timestamp showing the date and time of filing, where it was filed, etc. And once you have the uh the you know, the the document with the filing stamp on it. These days it's done electronically, of course. But once you have the the filing information in this
26:45 area, now you know that your that the court has uh you know, at least nominally accepted your claim. Okay, that doesn't mean the claim will be sustained. It just means that the court is having and now it's going to get reviewed by the appropriate parties. Okay. So and then here you just see you just got six questions to answer here. Total amount of the claim. That's how much you're owed. Claimant, the name. Okay, the claimant may be you. It may be a company and you can see it's an individual or an individual um um or entity doing business under a
27:21 fictitious name. Okay, could be a partnership, corporation, could be an LLC. That would go under other. Okay, so that's that's number two. Number three, address of claimant. Same you know, the address. Number four, claimant is the creditor or a person acting on behalf of the creditor. Now, if it's a person acting on behalf of the creditor, do you need to state the reason why? So let's say your uh your parent is the actual creditor um but your parent is not able to uh take care of this kind of business and
27:59 so you you are acting under a power of attorney to handle the the business affairs of your parent. Okay, so in in this case you're filing it, you know, on behalf of such and such as their attorney in fact and you would just specify that there. Okay.
28:16 >> [snorts]
28:16 >> Um and then claimant is the personal representative or the attorney for the personal representative if that's the case. Okay, and then uh number six, I am authorized to make this claim which is just and due or may become due. All payments on or offsets to the claim have been credited. Facts supporting this claim are either on reverse, meaning on the other side, not likely, or attached. That's why when I was talking about if someone owes money and they having a copy of the note that that that evidences the claim is important. Okay, then you fill in the date, you type in your name and you sign
28:53 it and you're done. You can see it's a very simple form. Now here here you could put in the facts supporting it if you wanted to, but you but you know if there you know, if you have no actual written evidence, you'll just put the facts here. And then you have to do the proof of mailing. Okay, which I'm not going to get into. But in any event, this is the creditors claim document here in California. You can see it's it's it's pretty simple to you know, to deal with and you know uh especially if you have a small claim.
29:29 That's why I recommend just you know, do your best and you know, go to the court, get their help. Okay, and and and and that way you might be able to still sustain your claim without having to pay more in legal fees than you know, the claim itself is worth. Obviously, if it's a larger claim, you're going to want to get for sure you're going to want to get legal advice. You don't want to make a mistake and then have, you know, a multi-thousand dollar or more claim, uh, you know, denied, uh, by the estate or by the court, uh, because you've made
30:06 some kind of error that wasn't and it didn't get corrected in the proper amount of time and now the deadline has passed and, uh, you know, too bad for you kind of thing, okay? All right. So, uh, complete the creditor's claim form. And and you can see the I just showed you the form itself, so you can see, uh, what needs to be done there. Okay, so that's step number four. Step number five. File the claim with the probate court. Okay, so you take you take the, uh, document. I I mean, worst case scenario, you take the document to the court, you go to the
30:42 clerk's office, you wait in line, and you file the document, okay? And if you're filing it hard copy paper, the clerk may actually stamp it, okay? These days, a lot of courts allow for documents to be filed online, okay? So, you know, maybe you have a lawyer friend who as a favor will file it online for you, and that way it can it can will save you the trouble of having to drive to the court, okay? If not, there are what are called attorney services, and
31:18 these services, for a fee, will file a document. They're not particularly expensive, and so, you you know, if it's, you know, like if you live in Los Angeles and it's in a couple of hours to drive to the court and back, you may decide it's it's more economical to, you know, pay to have the document, uh, filed than it is for you to drive all the way downtown through the traffic and whatever and then wait in the line at the clerk's office and all of that, okay? Uh, you know, candidly, I avoid filing things in person, you know, if I possibly can, uh, cuz
31:53 then there's also parking. You got to pay for parking cuz there's there's no place to park for free in downtown Los Angeles. But if you live in a small county, uh, where the court is not, you know, overwhelmed and and very busy, so it may not be a big deal, a 10-minute drive, 15-minute drive to the court, and you walk in there. Uh, I I I know when I I had to file a document in Bessemer County, uh, um, court in in Alabama on a matter I was handling there, uh, I my gosh, the the the clerks were just so friendly, so helpful. Even the security people going
32:30 into the the courthouse were just incredibly helpful and friendly. Um, you know, and then I'm I'm doing the old, you know, when you're in a new building, haven't been in before, and you're trying to figure out where to go, you know? And then someone saw me doing the look, came and said, "Uh, may I help you?" I said, "Yes, I'm I'm looking for the clerk clerk's office." And she said, "Oh, sure. Yeah." She said she And she said, "Look, you know," she kind of walked me part way there. She says, "See that door there at the end of the hall where the it's open? Just go right in there." Thank you so much, right? Um, candidly, people are not that friendly at LA
33:05 Superior Court, at least Stanley Mosk. So, uh, but but in any event, um, you know, you need to file the form, okay? And and get that that stamp on it, whether it's, you know, an actual stamp or whether it's the electronic stamp, largely immaterial, but that's again what what it you know, verifies that the the, uh, claim has been filed. And of course, the date it was filed, that's the date that matters with respect to, uh, the deadline, okay? So, uh, you know, if if if you're getting
33:42 close to the deadline, you know, you may choose to go to the court to file it yourself to make sure that nothing happens to, you know, with the filing service you're using and then it gets stamped too late because they filed it late and now your claim is denied because it wasn't timely, okay? So, all of those things, you know, you are you want to consider. And, you know, it it it and in the end, uh, you know, uh, even if it's a small claim, you may choose to use an attorney. Uh, maybe the
34:17 attorney will just take, you know, 10 minutes to look over what you've done, verify it's correct, and go ahead and file it for you, and that way you can be assured that, uh, you know, that it was filed that it was filed correctly on a timely basis, and okay, so you got to pay for 10 minutes of a lawyer's time, you know, even at $700 an hour, that's 70 bucks. Well, no, it's more than that. It's Let's see, it's a sixth. So, whatever it says, it's a a hundred and some odd dollars, 120 dollars, basically. And, you know, maybe that's good insurance to make sure that at least, you know, your
34:54 your claim is timely and properly filed, okay? All right. So, file the claim with the court. Number six, deliver a copy to the personal representative, the administrator, the executor, etc., okay? So, within 30 days after filing, the creditor must serve a copy um, of the claim form, the the the claim with the filing stamp on it, to the estate's personal representative or attorney of record. That's the the attorney of record is the attorney for the personal representative, okay? So,
35:30 it can be mailed, and that's why you saw that proof of mailing there. Um, you can also I would I would recommend that if you are going to mail it, that you, uh, do so certified mail, so you can track it, make sure it's been delivered, get get a signature for delivery, so that whoever receives it signs that it's been received, okay? Um, because you've got another, you know, 30-day, uh, deadline there, okay? So, it's not enough just to file it with the court, but it has to be served on the administrator or the administrator's
36:05 lawyer as well. Otherwise, in theory, how would they know about it? Now, of course, a good administrator is checking the court record periodically. I know I check the court record virtually every day that the court is open, okay? Full disclosure, didn't check it on Friday, was on vacation, okay? [laughter] But, uh, uh, and and, you know, uh, I mean, you know, fortunately, nothing happened of consequence, and if it had, I had I have someone who backs me up on that kind of stuff. He would have let me know, he would have called me, and, you know, rallied the troops, so to speak.
36:41 But but in general, uh, you know, even if you you and if the administrator like me regularly checks the court records, your it doesn't matter, you're still required to serve a copy on the lawyer, okay? Let's take another quick break, and we'll come back and wrap this up. Probate and Trust TV, your curated source for the most useful and insightful content on estate planning and trust and probate administration, featuring standout professionals like Bill Gross, Paul Rabalais, James
37:18 Cunningham, and yours truly. Whether you're a lawyer, accountant, real estate professional, or working on your own succession plan, this channel helps you quickly find the clearest, most practical content YouTube has to offer. Subscribe now to Probate and Trust TV. Spend more time learning, less time searching. So, you know, and just a uh, sort of a little follow-on to to that spot about Probate and Trust TV. I I did a show on it a while back, but I seems like lately
37:56 I've spoken to a number of people who are at least potentially fiduciary license and administrating trusts and probates here in California. So, I would encourage you if you're investigating that as a career, to check out Probate and Trust TV. There's a tremendous amount of great information there. Um, I think I've got nine or 10 content providers now, all of the top content providers on YouTube within the trusts and estates space. So, you'll find lo- you know, a a variety of voices talking about what it's like to
38:32 do what we do, and I think that will help you make a decision as to whether this is, you know, the right professional, uh, path for you. And and by the way, you can always feel free to contact me about that. I'm always happy to help people get involved in the profession of administrating, uh, trusts and estates. There is nowhere near enough people, uh, doing it, at least here in California. Okay. So, uh, we just talked about the next couple of steps, file the claim with the probate court, deliver a copy to the personal representative, okay? Now, you
39:08 have to wait for the claim either to be allowed or for it to be rejected. So, uh, just like you had to, um, uh, deliver a copy or serve a copy on the per- personal representative within 30 days of it being filed, now the personal, uh, representative has 30 days to allow or reject your claim, okay? Now, um, it's a pretty simple process, um, and, um, the rejection of the claim has to be done in writing. So, it's not
39:43 enough for the the administrator to just say, "No, this is a nonsense claim. I'm not going to pay this, you know." Uh I would hope, by the way, that no administrator would be so cavalier. Uh but, if for some reason uh the administrator rejects the claim, okay, he has to do so in writing uh notifying the creditor, okay? Uh and the reason that's important is having timely filed the claim, even if even if it's rejected, that doesn't mean that uh you know, you are forever barred
40:19 from trying to collect that money. It just means you're going to have to go the next step. Okay? So, if a claim is allowed, of course, okay, you're good. So, the claim will be paid, but it's not going to be paid right away. It's only going to be paid as part of the distribution plan that the administrator submits to the court, okay? Because of the fact that there are priorities of claims, okay? So, your a claim your claim may be allowed, but because of prior claims, you may not get
40:56 paid because there's insufficient money to pay you, okay? Now, you will always have a claim superior to the claim of the heirs, okay? Now, I'm again, I'm the heirs don't have a creditor's claim. I just mean the claim that the heirs have on the estate as heirs, okay? Their claim is last. All the debtors of the estate, I'm sorry, all the um sorry, all the creditors of the estate will be paid first before money is distributed
41:34 to the heirs, okay? And that's why um sometimes you will see that early on in the administration of an estate, if if heirs kind of get the gist that there's good this is going to be a creditor heavy estate, and that in fact the estate may be insolvent, okay, they will take advances on their inheritances, knowing that even though they may only get 50 cents on the dollar of what they might inherit from the estate, in the
42:09 end they're likely to get nothing because creditor claims are going to eat up the entire value of the estate, and so at least they'll get half. And then who's the loser? Well, the loser is the company that advanced funds to the heirs, okay? And I think I have an I do I Is he coming up or did I already Trying to remember. I have a I think I have a guest coming up to talk about this. Oh, no, no, I I know, I had a guest. Yeah, we talked about this. So, my guest Mark Harris, if you go back to the show
42:44 that I did on October 6th, so Mark Harris and I talked about um uh probate advances and how all that works. And Mark Mark said, you know, "Sometimes we lose our bet." Okay? That's that's how it goes, all right? All right. So, um if now, that's that's an acceptance. If your claim is rejected, okay, that again, that doesn't mean that's it, you're done. What it means is, okay? And by the way, maybe part of the claim is allowed and the rest is rejected. There's different ways, you
43:19 know, this can happen. But, let's say at least part of your claim was rejected. Okay? Now, you have to file a lawsuit within 90 days after the notice of rejection, or your claim will be barred. So, you can see that time is of the essence in all of this creditor claims process. What the court Well, I should say what the state of California wants to avoid is a situation where uh an the the closing of a probate is
43:54 held up because creditor claims are dribbling in. Nope, get in, get your claims submitted, get them accepted or rejected. If they're rejected, get that lawsuit in. Otherwise, you're done, okay? Your claim is going to be barred. Now, what will happen in a lawsuit? Just like what happens in any lawsuit, okay? So, you'll you're as the uh as the petitioner, you will file your uh evidence that your claim is valid. The personal representative who rejected it will submit whatever evidence he has
44:32 as to why he rejected the claim, and then the judge is is is going to make a decision. It's it's unlikely to be a a jury trial. Never heard of a jury trial in a creditor's claim situation, okay? Uh pro- probate court is not a a jury court, if you will, okay? So, uh it's it's going to be the judge's decision. Now, let's say that the judge sustains the decision of the personal representative in saying that uh the the claim is rejected, that doesn't end it there, either, okay? You
45:08 always have the ability to appeal the probate court judge's decision. Now, now you're starting to get into some very serious money. It can easily cost 25 to 50,000 dollars just to file the appeal. So, if it's a small claim, at that point you may just give up. But, if it's a large claim, okay, I I have one estate that I'm administrating where the claim against the decedent is almost 3 million dollars. They spent years getting the claim sustained in probate court, okay?
45:43 So, in a case like that, even if the probate court judge had rejected it, in this case he didn't, but if he had, I imagine the claimant would have appealed that ruling uh because it was a large claim, number one, and number two, the claimant is a very large company. I won't I won't say who they are. I don't want to cause, you know, that kind of stuff, but but they easily could have could afford the cost of an appeal, and I imagine they would have filed an appeal, okay? And I mean, I I suppose, you know, even if the
46:18 appellate court uh you know, rejects the appeal, you could appeal it to the Supreme Court, um especially if there's some sort of fundamental legal issue there, um that maybe you feel the uh probate court and the appellate court overlooked. So, then maybe at that point you would appeal it to the Supreme Court. Again, it would have to be worth it, or you would have to be doing it on principle, which it's it's expensive to be principled in that in that respect here in California, okay? All right. [snorts] So, that is the process for
46:54 filing a creditor's claim, okay? Now, there are some special circumstances that I'm not going to talk about today. Uh I've talked about uh secured uh secured debts before. I talked a bit little bit about them at the beginning of this episode, so those are different. They don't have to go through the creditor's claim process. Now, you may have some kind of contingent debts, those kind of things. Once you're into those complexities, you need to get a lawyer to help you out with those. They're not straightforward cases, and at that point you need competent
47:30 legal uh counsel in order to see to it that your claim is handled properly, okay? So, what I've talked about today is just kind of the administrative side of creditor's claims, which is again, not a lawyer, so I'm not giving you legal advice, but but this is the the administration side of creditor claims here in California. And again, it's the the process in other states is is I I suspect pretty similar. I haven't handled cases in all 50 states, but in the ones I have, it's it's like I said,
48:05 it's pretty similar. There are deadlines for um when claim has to be filed. There are they the claim has to be served on the personal representative. The personal representative has has a certain amount of time to uh allow or reject the claim. Lawsuit following up a rejection has to has a certain amount of time to be filed, etc., okay? So, if you have any uh thoughts, questions, comments on this episode, all of my social media links will be in the show notes on YouTube after this episode posts. Feel free to use those avenues to
48:41 communicate. If it's a legal question, um I'll get back to you with an offer to uh refer you to a lawyer who is qualified to answer that question. I'm happy to do that. Uh I I I know lawyers pretty much everywhere in the country now. Uh and so, I'm I'd be I'd be happy to connect you with someone who can help you if you have a creditor's claim um you know, really anywhere in the country. Uh and and for that matter, if you if you have a creditor's claim outside of the United States, I have someone I can uh look to to get you a
49:18 a referral for, you know, a creditor's claim in in wherever Mexico, Canada, Europe, etc., Asia, okay? We'll we'll we'll make sure you get uh somebody competent to help you with that. So, all right. I thank you very much for joining me today. Uh and uh let's see, tomorrow, 10:00 a.m. Pacific Time is my show Business Lessons from the Military. And then on Wednesday at 10:00 a.m. Pacific Time is my show People Making Money. And this Thursday is my every other week show at 5:00 p.m. Pacific Time, Jigger's Is Place. We're going to have a cocktail and a schmooze. And
49:59 that will then wrap up the week. So, I hope to see you later this week. And in the meantime, once again, thank you so much for joining me, especially my live guests. And I wish you a wonderful rest of the day. And signing off as I always do, Marie Darling, you are my pal.