Insolvent Probate Estate Claim-Payment Priority in California
At a glance
| Statutory payment order | Seven debt classes; prior classes paid in full first, subject to federal/state statutory preferences (§ 11420(a)–(b)). |
|---|---|
| Administration costs | Class 1; only property-related administration costs outrank liens on that property (§ 11420(a)(1)). |
| Funeral and last illness | Class 3 funeral expenses; class 4 last-illness expenses; § 11421 allows payment when funds suffice (§§ 11420(a)(3)–(4), 11421). |
| Family and homestead allowances | Class 5; payable when funds suffice, subject to § 11420 priority (§§ 11420(a)(5), 11421(c)). |
| Taxes and public claims | United States or California debts with statutory preference receive that preference; § 11420 does not itself assign one class to all taxes. |
| Secured claims | Class 2 to collateral proceeds in lien order; unpaid deficiency becomes general debt (§ 11420(a)(2)). |
| Support and special debts | Class 6 wage claims; § 11420 lists no separate support-debt class. |
| General claims | Class 7 includes unsecured judgments and debts outside prior classes (§ 11420(a)(7)). |
| Underfunded class | Within an underfunded class, each debt receives a proportionate share, unless another statute provides otherwise (§ 11420(b)). |
Requirements one by one
Administration and secured property
Under § 11420(a)(1), administration expenses are the first class. Where property is encumbered, however, only expenses “reasonably related to the administration of that property” take priority over the secured obligation. Section 11420(a)(2) pays liens in their own priority order from the collateral proceeds. If the proceeds do not satisfy the obligation, the balance joins general debts.
Paying funds already held
Cal. Prob. Code § 11421 lets a representative with sufficient funds pay funeral expenses, last-illness expenses, family allowance and wage claims after retaining enough for administration, but expressly makes that direction subject to § 11420. Section 11422(a) generally requires a court payment order for other debts; § 11422(b) directs the court to specify each creditor's amount if estate property cannot pay every debt.
Class shortfall
Section 11420(b) forbids payment of a class until all earlier classes are paid in full. Within a class the debts ordinarily have no preference over one another; if assets fall short, each receives a proportionate share.
What trips people up
Section 11420(a) opens with a reservation for United States and California debts that have a preference under their own law. The seven-class list alone cannot determine that outside preference. An unsecured judgment is a class 7 general debt; a judgment lien is treated under the secured-property rule to the extent of collateral proceeds.
Common questions
Where are funeral costs and the family allowance? Funeral expenses are class 3; the family allowance is class 5 under § 11420(a).
Does a secured creditor's unpaid balance keep class 2 priority? Section 11420(a)(2) classifies a deficiency remaining after collateral proceeds with general debts.
Statutes and sources
- Cal. Prob. Code §§ 11420–11422. Verbatim current official text, section URLs, and access dates appear in the source fields above.
Source links
Every statute quoted above, linked, with the date we checked it.
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