A California Superior Court in the case of In Estate of Holdaway recently ruled in favor of a creditor who was attempting to collecting on a deceased person’s estate. Following the individual’s death in 2013, a creditor in 2014 filed a petition for probate and seeking compensation for $90,875 on a debt. This claim was based on four loans the creditor made to the deceased individual and in-home services provided to the deceased individuals. In 2015, a trial court issued an order showing why the creditor’s petition should not be dismissed for failure to prosecute.
Later in 2015, the trial court ordered that the case should be dismissed without prejudice. In 2016, the deceased individual’s son filed a competing petition for probate, which stated that the deceased individual had left all of his assets to a family trust. The trial court later granted this competing petition. After this, in 2017, the son rejected the creditor’s claim against the estate, which led the creditor to challenge this denial.
In arriving at its decision, the Court of Appeal stated that the trial court does not have a power authorizing it to extinguish the claim of a creditor in such a way based on the mere stipulation that others are interested in the estate. As a result, the appellate court reversed matters and remanded the case to the trial court.