In California Probate Code, there’s an order in which creditors’ claims are addressed. Section 11420 of the Probate Code organizes them into classes and assigns them priority. Here are the seven classes of creditors under California Probate Code.
Class 1 – Expenses of Administration
The first priority is to pay for the estate’s administrative expenses. Additionally, any expenses for actually administering the property with obligations secured by a mortgage, a lien or a deed of trust, actually take priority over the actual mortgage, lien or deed of trust.
Class 2 – Obligations Secured by a Mortgage, Deed of Trust, or Other Lien
After that, the personal representative has to make sure all obligations secured by a mortgage, a lien or a deed of trust are fulfilled. Then, if proceeds from the estate can’t over those obligations, the rest goes to the estate’s general debts.
Class 3 – Funeral Expenses
All funeral expenses are charged against the estate of the person who died. They are not to be charged to the surviving spouse.
Class 4 – Last Illness Expenses
Next, any expenses from the final illness that caused the death, if an illness caused the death get paid.
Class 5 – Family Allowance
After that, the personal representative must give an allowance from the estate funds of a reasonable amount to the decedent’s surviving spouse, minor children, and any adult children who were dependent on the decedent’s support before because they were unable to work due to a physical or mental condition.
Class 6 – Wage Claims
Any employee who had been employed by the decedent or who did contracted work for the decedent within the 90 days prior to death is then entitled to a wage claim up to $2,000.
Class 7 – General Debts
After all of the above classes are taken care of, then, creditors with general debts not included in prior classes can be paid.
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