Commonly Asked Questions about Insolvent Estates

Question 1: What does it mean when an estate is “insolvent?”

When a person dies and leaves behind property, that property is known as the estate. The estate includes both assets and debts. When the value of the property is less than the amount of debt, the estate is known as insolvent.

Question 2: Who is responsible for paying the estate debt?

Any debt left behind must be paid for with estate assets. After a person dies a probate court will appoint someone to manage the estate property, a person referred to as either the executor, estate administrator or personal representative. The administrator is responsible for determining what estate assets there are, as well as deciding how to use them to pay for any debts the deceased left behind. If there are not enough assets to pay all the debts, the administrator will determine which creditors are repaid and which are not.

Question 3: Does the family ever have to pay for the debt?

Any individual debt a person leaves behind after his or her death must be paid for by the estate. Creditors cannot try to collect the debt from the spouse or other family members of the deceased person. However, if a family member had a joint debt with the deceased person, the surviving family member is still responsible for paying that debt as a co-borrower.