Being named the executor of an estate in California involves many duties. Chief among them will be the responsibility to ensure that all debts owed by the estate are paid off in a timely and full manner. You must also ensure that all people named beneficiaries receive their portion, which can be challenging.
How can an estate be labeled insolvent?
Insolvency is the situation that can occur when an estate doesn’t have enough assets to pay off all its debts, taxes, inheritances, and administrative expenses. The estate administration and probate supervisor will need to find a solution. The estate preceding will need to halt when the estate they oversee is found to be insolvent until a solution is presented and agreed upon.
Preparing your estate before death helps to prevent insolvency and assess the level of your debt. You can compare the existing debts of the estate against the number of your probate assets. The most common debts that may be causing your estate to become insolvent may include:
- Overdue taxes
- Outstanding business loans
- Child support or alimony payments
- Mortgages on homes or other properties
- Car payments
Does the estate have to pay all debts?
One of the primary duties of the executor is to make sure that all the creditors are paid in a timely manner. Insolvency prevents pay-offs of all estate bills before a resolution is found.
A statute of limitations commences for all creditors to make a claim on the estate after your or a loved one’s death. Notify the creditors as soon as possible to comply with legal proceedings on your side. If, by chance, the creditors do not reply by the deadline, they will lose their ability to collect from the estate.