What Happens When an Estate Is Insolvent?
An estate is insolvent when its debts exceed its assets. The executor then pays claims in the order the state's statute fixes, administration costs and funeral expenses first and general creditors last, each class paid in full before the next receives anything, and is personally liable for paying out of that order.
An estate is insolvent when the claims against it exceed the assets available to pay them. Each state sets the order in which those claims are paid. Across the 51 jurisdictions, the order runs from 2 to 14 classes.
In the order set by the statute of the state where the estate is administered. Claims are grouped into classes, and the classes at the end of the order are the ones left unpaid when the money runs out. Selecting a state above shows its classes, each cited to the statute.
In 36 of the 51 jurisdictions, the statute pays the claims within a class in proportion to their amounts. In the rest, the statute sets the rule class by class. The state pages show the rule with its citation.
In 27 of the 51 jurisdictions, the statute states that the executor or personal representative is not personally liable for the decedent's debts. In 24, one who pays a later class before an earlier class is paid in full is personally liable, and in 17, one who distributes property to heirs while claims are unpaid is personally liable. The state pages show each rule with its citation, or that the statute does not state one.
A person named in a will who has not been appointed can decline the appointment. Each state sets how: in 37 of the 51 jurisdictions, the statute provides for a written renunciation filed with the court. The Renunciation of Executor form prepares the writing or the state's official form.
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Named as Executor
What an executor actually does: getting appointed, notifying creditors, paying debts and taxes, and where personal liability starts.
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Death of a Parent
A step-by-step guide to what happens after a parent dies: the documents to find, the certificates to order, and whether probate is even required.
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Loss of a Spouse
What a surviving spouse needs to do: death certificates, survivor benefits, whether probate is even required, and the tax election that expires.
Learn moreForms for Settling an Estate
Free forms for settling an estate: probate petition, small estate affidavit, creditor notice and closing forms. Prepare each form for your state.
Petition for Probate and Letters
Open probate and ask the court to appoint you and issue Letters Testamentary or Letters of Administration.
Notice to Creditors
Notify estate creditors and start the claim period — the published notice plus mailed copies for known creditors.
Renunciation of Executor
Decline an appointment as executor named in a will — the writing filed with the court before anyone is appointed.
Affidavit of Heirship
Prepare the sworn statement of a deceased person's family history and heirs for recording in the county land records, with your state's recording instructions.
Small Estate Affidavit
Collect a small estate's property without probate — the sworn affidavit presented to banks and other holders, with a presentation letter for each.
Estate Inventory
Prepare the probate inventory of estate property — every asset at its date-of-death value, composed to your state's statute, with the state's filing or delivery instructions.
Tools for Settling an Estate
Free tools for settling an estate: whether probate is needed, executor and trustee pay, creditor deadlines and taxes. Run each tool for your state.
How Much Can an Executor Charge?
Calculate how much an executor can charge for administering an estate.
Can I Self-File Probate?
Whether your state lets you open probate yourself, and what it costs with a lawyer and without one.
How Do I Get Letters Testamentary?
See the court that issues Letters Testamentary or Letters of Administration, the petition, the bond, and the documents to file.
What Are the Creditor Claim Deadlines?
Find creditor claim deadlines, notice requirements, and payment priority order for your state.
How Do I Claim a Deceased Person's Unclaimed Property?
See where to search for a deceased person's unclaimed property and what each state asks an heir or executor to send.
How Do I Open an Estate Account When Someone Dies?
Compare estate-account opening requirements bank by bank: channels, required documents, and steps.
