Article 3 - Creditors

California Probate Code — §§ 5670-5678

Sections (5)

Added by Stats. 2015, Ch. 293, Sec. 17. (AB 139) Effective January 1, 2016. Repealed as of January 1, 2032, pursuant to Section 5600.

Notwithstanding any other statute governing priorities among creditors, a creditor of the transferor whose right is evidenced at the time of the transferor’s death by an encumbrance or lien of record on property transferred by a revocable transfer on death deed has priority against the property over a creditor of the beneficiary, regardless of whether the beneficiary’s obligation was created before or after the transferor’s death and regardless of whether the obligation is secured or unsecured, voluntary or involuntary, recorded or unrecorded.

§ 5672

Added by Stats. 2015, Ch. 293, Sec. 17. (AB 139) Effective January 1, 2016. Repealed as of January 1, 2032, pursuant to Section 5600.

Each beneficiary is personally liable to the extent provided in Section 5674 for the unsecured debts of the transferor. Any such debt may be enforced against the beneficiary in the same manner as it could have been enforced against the transferor if the transferor had not died. In any action based on the debt, the beneficiary may assert any defense, cross-complaint, or setoff that would have been available to the transferor if the transferor had not died. Nothing in this section permits enforcement of a claim that is barred under Part 4 (commencing with Section 9000) of Division 7. Section 366.2 of the Code of Civil Procedure applies in an action under this section.

§ 5674

Amended by Stats. 2021, Ch. 215, Sec. 19. (SB 315) Effective January 1, 2022. Repealed as of January 1, 2032, pursuant to Section 5600.

(a)A beneficiary is not liable under Section 5672 if proceedings for the administration of the transferor’s estate are commenced and the beneficiary satisfies the requirements of Section 5677 or 5678.

(b)The personal liability of a beneficiary under Section 5672 shall not exceed the fair market value at the time of the transferor’s death of the property received by the beneficiary pursuant to the revocable transfer on death deed, less the amount of any liens and encumbrances on the property at that time.

§ 5677

Added by Stats. 2021, Ch. 215, Sec. 21. (SB 315) Effective January 1, 2022. Repealed as of January 1, 2032, pursuant to Section 5600.

(a)If proceedings for the administration of the transferor’s estate are commenced, a beneficiary of a revocable transfer on death deed is personally liable to the estate for a share of the transferor’s unsecured debts.

(b)In calculating the beneficiary’s share of liability under subdivision (a), the abatement rules provided in Part 4 (commencing with Section 21400) of Division 11 shall be applied, using all of the following assumptions:

(1)The property that was transferred to the beneficiary by revocable transfer on death deed shall be treated as if it were a specific gift made by the decedent’s

will.

(2)The value of the property received by the beneficiary pursuant to the revocable transfer on death deed shall be deemed to be the fair market value of the property at the time of the transferor’s death, less the amount of any liens and encumbrances on the property at that time.

(3)Any unsecured debts of the transferor that were paid by the beneficiary pursuant to Section 5672 shall be treated as if they were claims made against the transferor’s estate.

(c)The personal representative shall provide a written statement of liability to the beneficiary, which specifies the amount that must be paid to the estate.

(d)The beneficiary is personally liable

to the estate for the amount specified in the statement of liability. Any amount that the beneficiary paid toward the unsecured debts of the transferor pursuant to Section 5672 shall be credited against the amount that the beneficiary owes the estate under this subdivision. If the amount that the beneficiary paid pursuant to Section 5672 exceeds the amount specified in the written statement of liability, the estate shall reimburse the difference to the beneficiary. For the purposes of Section 11420, this reimbursement shall be deemed an expense of administration.

(e)In the event that the beneficiary and the personal representative cannot agree on the reimbursement or liability due under this section, the beneficiary or personal representative may petition the court for an order determining the amount of the reimbursement or

liability.

(f)The reasonable cost of proceeding under this section shall be reimbursed as an extraordinary service under Sections 10801 and 10811. The beneficiary is liable for the payment of that cost, which shall be separately identified in the statement of liability.

§ 5678

Added by Stats. 2021, Ch. 215, Sec. 22. (SB 315) Effective January 1, 2022. Repealed as of January 1, 2032, pursuant to Section 5600.

(a)If proceedings for the administration of the transferor’s estate are commenced, a beneficiary who receives property from the transferor under a revocable transfer on death deed may voluntarily return that property to the transferor’s estate for administration.

(b)Property returned to the transferor’s estate under this section shall be treated as if it had been specifically devised to the beneficiary by the transferor.

(c)If the beneficiary’s action or inaction increased the value of property returned to the estate or decreased the estate’s obligations, the estate shall reimburse the beneficiary by the

same amount. Actions or inaction that increase the value of returned property or decrease the estate’s obligations include, but are not necessarily limited to, the following actions:

(1)A payment toward an unsecured debt of the decedent.

(2)A payment toward a debt secured against the returned property.

(3)A significant improvement of the returned property that increased the fair market value of the property.

(d)If the beneficiary’s action or inaction decreased the value of property returned to the estate or increased the estate’s obligations, the beneficiary is personally liable to the estate for that amount. Actions or inaction that decrease the

value of the returned property or increase the estate’s obligations include, but are not necessarily limited to, the following actions or inaction:

(1)An action or inaction that resulted in a lien or encumbrance being recorded against the property.

(2)The receipt of income from the property, if that income would have accrued to the estate had the property not been transferred to the beneficiary.

(e)The personal representative shall provide the beneficiary a written statement of any reimbursement or liability under this section, along with a statement of the reasons for the reimbursement or liability. For the purposes of Section 11420, any reimbursement under this section shall be deemed an expense of administration.

(f)In the event that the beneficiary and the personal representative cannot agree on the reimbursement or liability due under this section, the beneficiary or personal representative may petition the court for an order determining the amount of the reimbursement or liability. In making a decision under this subdivision, the court should consider the surrounding circumstances, including whether the parties acted in good faith and whether a particular result would impose an unfair burden on the beneficiary or the estate.