As Executor, there are many responsibilities and duties towards creditors.
As Executor, there is a duty to notify both known and reasonably ascertainable creditors of the death of the decedent. This includes not only creditors with outstanding bills, such as doctors, credit card companies and utility companies, but also people who may have a potential claim against the decedent on account of something that happened during the decedent's lifetime.
For example, if the decedent was involved in an auto accident in the year prior to his or her death, or if the Executor learns that someone, even if that person is a relative, may have loaned money to the decedent and may expect to receive payment from the estate, the Executor should notify those persons that Probate has begun.
If the decedent may have incurred any tax liability before death, whether assessed before or after the decedent's death (except for real property taxes or assessments), the Executor must give notice to the appropriate tax agency.
In addition, the Executor is also required to notify the Department of Health Services of the decedent's death if the Executor knows or have reason to believe that the decedent received Medi-Cal health benefits or was the surviving spouse of a person who received Medi-Cal health benefits.
It is also a good idea to send notice to the Department of Health Services even if the Executor does not have any reason to believe that decedent or his or her surviving spouse received Medi-Cal health benefits.
Notice to creditors?
The Executor must prepare special Probate notices, called “Notice of Administration to Creditors” and include the names and addresses of each creditor or potential creditor who is to receive this notice. This means that the Executor must take reasonable steps to identify any such creditor. For example, an Executor should inspect the decedent’s desk drawers, mail, and other locations reasonably believed to contain information concerning the decadent’s creditors. That said, the Executor does not need to conduct an extensive investigation or search for creditors.
As with all Notices in Probate court, all interested parties must be properly served, and the proof of service must be filed with the court many days prior to the next scheduled hearing.
The Notices must be served on the creditors within the later of:
1) Four months after the date Letters are first issued, or
2) 30 days after the Executor first has knowledge of the creditor (even if four months has already passed).
The notice to be mailed to the Department of Health Services should be mailed not later than 90 days after the date Letters are first issued, and should include a copy of the decedent's death certificate.
Paying the decedent's debts even if the creditor has not filed a claim.
A creditor may request that you pay debts only if you are certain that the bill is valid and there is enough money in the estate to pay all claims in full, including taxes that may be owed. You may treat a bill as a "demand for payment," even if the creditor has not filed a formal claim.
However, if there is any question as to whether the bill is valid or whether there are enough assets of the estate to pay all of the decedent's debts in full, the Executor should wait until the end of the claim filing period (the later of four months after Letters were first issued, or sixty days after the last Notice of Administration was mailed) to determine the total amount of creditor's claims filed against the estate.
Notice to secured creditors
Secured creditors (such as financial institutions holding a mortgage on the decedent's home or other real property) should also get notice of the Probate administration.
However, a secured creditor does not need to file a formal claim in order to enforce their rights to the secured property, as long as the secured creditor agrees not to pursue any claim against other estate property. The Executor should continue to make mortgage payments if there is sufficient money in the estate to make payments (and pay the other expenses of the estate).