4 Challenges for the Executor when Administering an Insolvent Estate
Debt is a part of life for the majority of us. As an executor, settling debts on behalf of the deceased can be a burdensome task, especially when it is a loved one that the executor just lost. However, that task can become all the more complicated when you find that there are insufficient assets left in the estate to cover all debts and liabilities, which is the case in insolvent estates.
An insolvent estate can be much more complicated, costly, and burdensome for the executor, making it important for them to understand what to expect. In other words, they need to know what they might be walking into.
Here are the challenges and complications you should consider.
Challenge: What Debts Should be Paid First?
One of the first things an executor for an insolvent estate will have to deal with is what debts should be paid first. It’s important to understand that state law can dictate this order of priority, as the probate process is done through the state and those laws can differ from one state to the next.
However, you can expect to follow this general order of priority:
- Funeral expenses
- Estate expenses (legal, executor, and court fees)
- Taxes
- Creditors
- Payments to beneficiaries