Estate Has Insufficient Assets to Cover the Debt
What happens if the estate doesn’t have enough assets to pay of the existing liabilities?If your loved one’s estate has insufficient assets to cover the debt, it is considered insolvent. Watch this video by experienced Buffalo Estate Planning Attorney Thomas F. Hewner for guidance on your legal options. If you have questions about estate planning, please contact our office to schedule a consultation. Let our experience work for you.
- When spouses of deceased individuals tell us that their husband or loved one left numerous debts and very few assets, we share the rules regarding payment of debts from estates.
- When an individual dies, the estate is liable for that person’s debts. No individual, executor, or spouse is personally liable for those debts.
- When addressing such a case, we must first learn what is in his estate. Often, there is nothing in his estate because the real estate is jointly owned with the spouse, IRAs are going directly to the spouse, and their bank accounts are joint.
- If a husband dies leaving $50,000 of assets and $100,000 of debts, creditors are entitled to those assets – but only what’s there. Under a deficit estate, each creditor gets a pro rata share, and that’s all they get.
- Even in cases with significant creditors, certain property is considered family exempt property. The spouse is entitled to $25,000 of cash or cash-type assets based on the theory that she must not be left poverty-stricken. A spouse is also entitled to a car valued under $25,000, furniture, and various personal items.