Administering an Insolvent Estate During Probate
Estate planning lawyers often advise clients not to outlive their savings, but short of assembling a daredevil bucket list and going through it in ascending order of danger, it is often difficult to predict the relative longevity of your body and your cash flow. Unexpected illnesses and injuries can happen to anyone, but financial catastrophes have become so common that they are no longer a surprise. One of the consequences of the pandemic was that people began to talk more openly about their financial struggles, but taboos surrounding talking about money remain, especially among the older generation. All of this means that, even if you have a close relationship with a family member of yours, even a family member who trusts you enough to include you in the will as personal representative, he or she may be in a much worse financial situation than you realize. For help fulfilling your duties as the personal representative of an insolvent estate, contact a Washington, D.C. probate lawyer.
Advice for Personal Representatives of Insolvent Estates
The purpose of probate is to enable creditors to collect their unpaid debts from a deceased person’s estate and for heirs to collect their inheritance, in that order. Under ideal circumstances, the decedent has left documentation of outstanding debts and the personal representative can easily locate them; the notice to creditors is just a formality. Careful estate planning can leave the estate with minimal debts, so that the debt payment process resolves quickly and the heirs can receive their inheritance.
If an estate is insolvent, it means that the debts the decedent owes are greater than the value of the assets he or she owned. In that case, the beneficiaries of probate are the creditors, not the heirs listed in the will. If you have been appointed as the personal representative of an insolvent estate, you should hire a probate lawyer. Your lawyer may be able to help you settle the debts for less than the creditors are asking, so that there will be some money left for the heirs to inherit.
Does the Family of a Person Who Died Insolvent Really Go Away Empty-Handed?
Maryland probate law indicates the order of priority in which the personal representative of an insolvent estate must satisfy the estate’s financial obligations. The creditors that file their claims first are usually the ones that get paid first and in the greatest amounts. Before the personal representative pays any debts to creditors, though, he or she must pay the family allowance if the decedent is survived by eligible relatives. The surviving spouse is entitled to $10,000, and if the decedent’s children are minors, each minor child gets $5,000. In other words, if the decedent was single or widowed or if the decedent’s children are adults, the family does not get an inheritance.
Contact Tobin O’Connor Ewing About Insolvent Estates
A Washington, D.C. probate attorney can help you settle an insolvent estate, whether or not the decedent wrote a will. Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.