Can a debt be collected against me or my family after death?
In California, a decedent’s family is not responsible for the debts of the decedent. There are times where a surviving spouse may be liable, but even that has its limitations. For example, if the decedent had a purely separate property debt, then the debt can only be collected from the decedent’s estate. It can be all so complicated, but the good news is the procedural burden is on the creditor to perfect his claim.
For starters, any creditor of a decedent has an obligation to file a claim in the decedent’s estate within four months of a probate estate being opened. If an estate is never opened, then the limit is one year after the decedent’s death (see CCP section 366.2). That one-year limit is a “bright-line” rule, meaning the creditor must file before the year mark or be forever barred from collecting on a debt. If a probate estate is not opened by the decedent’s family or named executor, then the creditor has the right to open the probate for purposes of filing a creditor’s claim.
Once a claim is properly established against the decedent’s estate, then the creditor can enforce the claim against any assets in the estate, or any assets held in a revocable trust that was created by the decedent during lifetime (see Probate Code section 19001). That’s a pretty broad power, so establishing a claim against a decedent is an important first step.
But even then, the creditor cannot enforce payment against the decedent’s family. The assets of the decedent are the only recourse the creditor has to collect on the debt.
There is one very narrow exception where a creditor can sue a beneficiary of an estate directly (referred to as distributee liability). Under Probate Code section 9392, a distributee can be sued directly if (1) the creditor was known to, or reasonably ascertainable by, a general personal representative within four months of the probate opening, (2) the creditor was not given notice of the probate administration and the creditor did not have actual knowledge of the probate administration, and (3) the one-year statute of limitations under CCP 366.2 has not passed before a lawsuit is commenced. Liability is limited to a pro-rata share of the estate received by the distributee (meaning if someone received only a small amount, then they are liable for only a small amount of the debt). Also, the debt collected cannot exceed the total amount of property received by the distributee from the estate (in other words, the distributee’s own assets cannot be attacked). This exception is meant to prevent a quick probate from happening where assets are distributed before a creditor is informed.
Overall, the law places a heavy burden on creditors to follow the procedures to perfect and collect their debts. And many creditors either don’t know the rules or fail to follow them for whatever reason (probably because it is a burden). So in most cases the procedure is your best ally against debt collection.