6
What If There is Not Enough Money to Pay All the Debts and Expenses (the Estate is Insolvent)?
An estate that cannot pay the debts owed by a decedent is insolvent. Wis. Stats. 825.59 specifies how funds are to be applied to the obligations of the estate. If the applicable assets of the estate are insufficient to pay all claims and allowances in full, the personal representative shall make payment in the following order:
(a) Costs and expenses of administration.
(b) Reasonable funeral and burial expenses.
(c) Provisions for the family of the decedent for living expenses during probate, support of the family education of children and retention of personal belongings including clothes, jewelry, an automobile, household furnishings and $3,000 of additional property.
(d) Reasonable and necessary expenses of the last sickness of the decedent, including compensation of persons attending the decedent.
There's more in part 2!
7
What Happens When an Estate is Involvent - Part 2
(e) All debts, charges or taxes owing to the United States, this state or a governmental subdivision or municipality of this state.
(f) Wages, including pension, welfare and vacation benefits, due to employees which have been earned within 3 months before the date of the death of the decedent, not to exceed $300 in value to each employee.
(g) Property assigned to the surviving spouse up to $10,000.
(h) All other claims allowed.
There is still more in Part 3...
8
What Happens When an Estate is Insolvent - Part 3
The personal representative is not responsible for obligations that cannot be paid from the assets of the estate. Sometimes, when there is no money to pay for anything, no one will accept nomination as a personal representative. As noted above, a court can settle insolvent estates without a personal representative if someone provides the court with an inventory of assets and a list of obligations.
Creditors of insolvent estates have the legal right to seek payment from assets in the decedents gross estate. This can include assets held by trusts formed with the decedents asssets and the recipients of other non-probate transfers.
Often, but not always, trustees are required to pay any expenses and debts that cannot be paid from the probate estate.
9
Do I Need an Attorney?
It is highly advisable to consult an attorney to be sure you understand your powers and responsibilities as a personal representative, a trustee or a power for disposition of last remains.
Sometimes an attorney’s role is advisory, offering opinions and recommendations on various issues as they arise. Sometimes the attorney handles all the details of administration subject to approval.
Sometimes the attorney and the person(s) responsible for administration divide the work among themselves and/or other experts.
Comments - add comment