Insolvent estates

I’m going to say a brief word here about insolvent estates, ie estate where the debts are greater in value than the value of the assets.

This is a complex situation and the Executors should consider seeking specialist professional advice. If no-one steps forward to deal with the estate, then the creditors will. If the value assets to pay the debts are sufficiently large, then it will warrant someone collecting the estate in and paying the value to the creditors, who should receive a percentage of the asset equal in size to the percentage of their debt, subject to any secured debt.

Secured debt is usually secured on property and the settlement of the secured asset to pay the secured debt comes before the payment of other creditors.

If the deceased estate is small in terms of both assets and debts, then each creditor still needs to be paid in proportion to the debt, but often if there are no assets the estate can be relatively simply resolved by the Executors writing to all the creditors and explaining the situation. The Creditors will have to write the debt off, unless the debt was held in joint names and there remains another person they can pursue for the debt.

As said, it is a complex area and potentially specialist advice should be sought. Executors should beware, they should consider renouncing Executorship.