What is an Insolvent Estate?

Often times medical bills and other related health expenses can begin to accrue at a substantial rate toward the end of someone's life. These debts must be paid, but you'll first need to determine whether an estate is solvent or insolvent.

An insolvent estate is an estate that does not have enough assets to pay off creditors. So basically after tallying all of the decedent's assets they are either equal to or less than the amount of debt that is owed. If this is the case, the Personal Representative will have to determine the priority of payments as stipulated by federal and state laws. According to whatever state law the estate falls under, some creditors take more precedence over others while some may not get paid at all. Unfortunately, if the estate is insolvent, it may also mean that the beneficiaries are left with nothing as well. But fortunately, they will not be responsible for paying the remaining debt, as long as they are not co-signers or co-guarantors on that debt.

Consult with a professional Estate Administration Lawyer who can help you to prioritize thes debts of an insolvent estate according to the law.

*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.