I am the executor of an insolvent estate in Ca with debt to the IRS and California Tax Franchise and others- do I need a lawyer?

Tough issue. The Insurance proceeds are not subject to the claims of creditors. If the decedent's daughter is the designated beneficiary on the IRA, that too will be transfered outside of the probate estatae and will not be subject to creditors. When you say that you are the "executor" do you mean that the will has been filed for probate or simply that you are designated as the executor in the will? If no probate has been opened, you should not pay anyone. There is a process in probate where creditors have four months from the issuance of Letters Testamentary to the Executor, to file a claim. If not they are out and cannot recover anything. If a probate has been opened you have to wait for the requisite 4 month period before you can pay anyone. If there is not enough money to pay all claims, there is a designated "pecking order" for who has priority over who. After payment of fees (including executor fees) and costs delinquent taxes take priority over general creditors. If you try to pay off some small creditors, you might have some liability to the creditors who have priority.

You should really speak to an attorney who handles estate administrations / probate estates to ensure you handle the property and debt of the estate appropriately. Depending upon who the creditors of the estate are, there is generally a hierarchy of whose claims should be paid first. Moreover, if certain property was transferred out of the decedent's name within 3 years prior to death, that property may be pulled back into the estate to pay for some of these claims (such as the automobile you referenced). So, in order to make sure that you are clear on all of the assets that are part of the estate, or may be pulled back into the estate to satisfy claims of creditors, as well as in what order to pay the creditors, it is best that you seek the counsel of an attorney near you. If you do not know of an attorney practices this area of law near you, take advantage of the lawyer locator information on this site, set up an appointment with a couple of the attorneys whose biographies impress you and determine who you feel most comfortable with representing you and the estate moving forward.

You must seek an OR estate counsel as there are some tough issues here to determine, especially as to whether the IRA can be subject to the claims of the estate. You should not have transferred the car to the daughter since debts must be paid before any assets can be distributed to beneficiaries. Finally, the life insurance proceeds are not subject to estate claims in most cases. To be sure of how to proceed get with an OR estates attorney. Hope this helps. If you think this post was helpful, please check the thumbs up (helpful) tab below and/or designate my answer as best answer. Thanks. Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is [email protected] , his website is www.sjfpc.com. and his blog is

Pursuant to California Probate Code Section 11420(a), taxes take priority in being paid from the estate. Thereafter, expenses of administration come next followed by obligations secured by mortgage or other lien, funeral expenses, last illness expenses, family allowances and so on to general unsecured creditors. Life insurance policies are an interesting question. For purposes of calculating estate taxes, life insurance policies owned by the insured at the time of his/her death is considered part of the estate because the decedent had control of the asset, including who receives the payout, at the time of their death. I do not have definate knowledge of how this would be treated by the IRS and the FTB but I would guess the daughter may receive a call from the IRS or FTB asking for her to cough up the taxes from the proceeds of the insurance policy. Your duty as executor is to pay the debts of the decedent according to the priority set in the code. When you get down to unsecured creditors, if you have enough cash to get there, they are paid pro rata. You as administrator or executor are only liable for any amount you received from the estate. One last word about the taxes. Your are responsible for having the income tax returns prepared and filed - including paying the taxes from the estate if there are sufficient funds.