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Does a San Diego Probate Protect me From Creditors?

Did you know that the number one reason for probate is to protect creditors? Yes, beneficiaries of the Will or estate are important too, but creditors always come first.

Life can be hard for creditors of a decedent. There are a mess of rules and procedures that creditors must follow to keep their claims alive. And if they fail to take action within a year of a decedent’s death, then they are forever barred from doing so in the future.

If you are receiving assets from a probate estate, then you are generally protected from creditors because the probate process requires creditors to be noticed and their rights either approved or rejected before assets are distributed. Sometimes people receive assets using the affidavit procedure under Probate Code section 13100 where assets are worth less than $150,000. In that event, the liability for creditor’s passes to the person receiving assets using this procedure, but only up to the amount of property received.

That means in some cases you are better protected from creditors if the assets pass through probate first before you receive them. Of course, you have to factor in the costs and time delay of probate too. It is far cheaper and faster to obtain assets by affidavit.

Luckily, all creditors are barred from obtaining assets after the decedent has been dead for one year (see CCP section 366.2). So whether you receive assets from an estate or a trust or joint accounts, the one-year mark puts you in the clear from creditors’ claims. But if you really want to put the lid on creditors, a probate is your only option.