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Article 3. Creditors of California Probate Code >> Division 5. >> Part 4. >> Chapter 3. >> Article 3.
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.
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.
(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
5676.
(b) The aggregate of the personal liability of a beneficiary under Section 5672 shall not exceed the sum of the following:
(1) 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.
(2) The net income the beneficiary received from the property.
(3) If the property has been disposed of, interest on the fair market value of the property from the date of disposition at the rate payable on a money judgment. For the purposes of this paragraph, "fair market value of the property" has the same meaning as defined in paragraph (2) of subdivision (a) of Section 5676.
(b) The aggregate of the personal liability of a beneficiary under Section 5672 shall not exceed the sum of the following:
(1) 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.
(2) The net income the beneficiary received from the property.
(3) If the property has been disposed of, interest on the fair market value of the property from the date of disposition at the rate payable on a money judgment. For the purposes of this paragraph, "fair market value of the property" has the same meaning as defined in paragraph (2) of subdivision (a) of Section 5676.
(a) Subject to subdivisions (b), (c), and (d), if proceedings
for the administration of the transferor's estate are commenced,
each beneficiary is liable for:
(1) The restitution to the transferor's estate of the property the beneficiary received pursuant to the revocable transfer on death deed if the beneficiary still has the property, together with (A) the net income the beneficiary received from the property and (B) if the beneficiary encumbered the property after the transferor's death, the amount necessary to satisfy the balance of the encumbrance as of the date the property is restored to the estate.
(2) The restitution to the transferor's estate of the fair market value of the property if the beneficiary no longer has the property, together with (A) the net income the beneficiary received from the property prior to disposing of it and (B) interest from the date of disposition at the rate payable on a money judgment on the fair market value of the property. For the purposes of this paragraph, the "fair market value of the property" is the fair market value, determined as of the time of the disposition of the property, of the property the beneficiary received pursuant to the revocable transfer on death deed, less the amount of any liens and encumbrances on the property at the time of the transferor's death.
(b) Subject to subdivision (c), if proceedings for the administration of the transferor's estate are commenced and a beneficiary made a significant improvement to the property received by the beneficiary pursuant to the revocable transfer on death deed, the beneficiary is liable for whichever of the following the transferor's estate elects:
(1) The restitution of the property, as improved, to the estate of the transferor upon the condition that the estate reimburse the beneficiary for (A) the amount by which the improvement increases the fair market value of the property restored, determined as of the time of restitution, and (B) the amount paid by the beneficiary for principal and interest on any liens or encumbrances that were on the property at the time of the transferor's death.
(2) The restoration to the transferor's estate of the fair market value of the property, determined as of the time of the transferor's death, less the amount of any liens and encumbrances on the property at that time, together with interest on the net amount at the rate payable on a money judgment running from the time of the transferor's death.
(c) The property and amount required to be restored to the estate under this section shall be reduced by any property or amount paid by the beneficiary to satisfy a liability under Section 5672.
(d) An action to enforce the liability under this section may be brought only by the personal representative of the estate of the transferor. Whether or not the personal representative brings an action under this section, the personal representative may enforce the liability only to the extent of the beneficiary's liability under Section 5672. The reasonable cost of proceeding under this section shall be reimbursed as an extraordinary service under Sections 10801 and 10811. Action under this section is optional. A personal representative is never required to act under this section.
(e) An action to enforce the liability under this section is forever barred three years after the transferor's death. The three-year period specified in this subdivision is not tolled for any reason. Nothing in this subdivision affects the requirements of Section 215, any law that may toll the limitations period for the commencement of a Medi-Cal estate recovery action, or the time for commencement of an action by the State Department of Health Care Services under Section 14009.5 of the Welfare and Institutions Code.
(f) If property is restored to the transferor's estate under this section, that property shall be treated as a specific gift and any proceeds remaining from the sale of the property after the payment of claims shall be returned to the beneficiary.
(1) The restitution to the transferor's estate of the property the beneficiary received pursuant to the revocable transfer on death deed if the beneficiary still has the property, together with (A) the net income the beneficiary received from the property and (B) if the beneficiary encumbered the property after the transferor's death, the amount necessary to satisfy the balance of the encumbrance as of the date the property is restored to the estate.
(2) The restitution to the transferor's estate of the fair market value of the property if the beneficiary no longer has the property, together with (A) the net income the beneficiary received from the property prior to disposing of it and (B) interest from the date of disposition at the rate payable on a money judgment on the fair market value of the property. For the purposes of this paragraph, the "fair market value of the property" is the fair market value, determined as of the time of the disposition of the property, of the property the beneficiary received pursuant to the revocable transfer on death deed, less the amount of any liens and encumbrances on the property at the time of the transferor's death.
(b) Subject to subdivision (c), if proceedings for the administration of the transferor's estate are commenced and a beneficiary made a significant improvement to the property received by the beneficiary pursuant to the revocable transfer on death deed, the beneficiary is liable for whichever of the following the transferor's estate elects:
(1) The restitution of the property, as improved, to the estate of the transferor upon the condition that the estate reimburse the beneficiary for (A) the amount by which the improvement increases the fair market value of the property restored, determined as of the time of restitution, and (B) the amount paid by the beneficiary for principal and interest on any liens or encumbrances that were on the property at the time of the transferor's death.
(2) The restoration to the transferor's estate of the fair market value of the property, determined as of the time of the transferor's death, less the amount of any liens and encumbrances on the property at that time, together with interest on the net amount at the rate payable on a money judgment running from the time of the transferor's death.
(c) The property and amount required to be restored to the estate under this section shall be reduced by any property or amount paid by the beneficiary to satisfy a liability under Section 5672.
(d) An action to enforce the liability under this section may be brought only by the personal representative of the estate of the transferor. Whether or not the personal representative brings an action under this section, the personal representative may enforce the liability only to the extent of the beneficiary's liability under Section 5672. The reasonable cost of proceeding under this section shall be reimbursed as an extraordinary service under Sections 10801 and 10811. Action under this section is optional. A personal representative is never required to act under this section.
(e) An action to enforce the liability under this section is forever barred three years after the transferor's death. The three-year period specified in this subdivision is not tolled for any reason. Nothing in this subdivision affects the requirements of Section 215, any law that may toll the limitations period for the commencement of a Medi-Cal estate recovery action, or the time for commencement of an action by the State Department of Health Care Services under Section 14009.5 of the Welfare and Institutions Code.
(f) If property is restored to the transferor's estate under this section, that property shall be treated as a specific gift and any proceeds remaining from the sale of the property after the payment of claims shall be returned to the beneficiary.
