Small Estates Creditors and Cars – Real Question

I received a question the other day which I modified to protect the identity of the person.  They asked:

Hi.  My uncle recently passed with my dad (his brother) as his closest relative and few assets.  His estate qualifies as a “small estate” under California law.  I cannot find any resources about how to treat his debts (he had a few thousand dollars in credit card debt and a car loan).  Does your book cover this or do you know of a good resource?  Can you send me a copy of your book?  I’d appreciate any help.


First of all my probate book (available on Amazon) only covers full probates. It’s goal is to explain the California probate process.  A “small estate” is basically not really a “probate” but rather is probate court avoidance. I am always happy to email you a copy of that book though.

Second, I would make a list of the assets and a list of the liabilities. For the car I would list the current value and also list the current car loan balance as a liability. The key to small estates is the person who receives assets (cars, banks, etc…) is technically liable for debts only to the extent they receive assets. If you receive a car worth $1,000 you are technically liable for $1,000 of debts. The decedent could have $10,000 in debt but the most you should be liable for is $1,000.

Assuming the car has value I would pay the loan off. I would do the California DMV “transfer without probate” forms. Here’s a link to their small estate webpage.

Are there any bank accounts or other such titled assets? Typically a California small estate affidavit should be used. That is, one small estate affidavit should be completed for each asset. I have a link to the form on my website here.

Lastly are the other liabilities. Make a list of all of them. Do not rush to pay one off. Make your list and then decide what to do.  At that point you can evaluate what assets you have received and determine the best approach?  Do you want to negotiate with the creditors and pay reduced amounts to each? Do you want to try to avoid the liabilities altogether? Do you want to pay them in full because the money was owed? Whatever the case there are different strategies but it’s my opinion you need a list of all the liabilities before you can really figure out the best solution.

In summary this is about small estate probates in California. I hope I have answered your questions.

-John Palley


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