Deceased Estates and Insolvency

People’s lives and financial affairs have become more complicated. Because of these complexities, the number of insolvent estates has increased in recent years. As a result, it is critical to identify an insolvent estate as soon as possible. If the executor or administrator dealing with the estate does not, they may face personal liability for their actions.

An insolvent estate is one in which the estate’s assets are insufficient to cover the money owed to creditors. Some of the debt may be covered by an insurance policy, such as a life insurance policy linked to a mortgage. Others, such as a joint credit card, may be joint debts.

With a few exceptions, the rules of bankruptcy apply to an insolvent deceased estate, with reasonable funeral costs and testamentary expenses paid before preferential and unsecured creditors but after secured creditors.

Clearly, this is a very complex area in an already difficult time, and thus expert advice is required.