State of Georgia Guidelines to Show That a Personal Estate Is Insolvent

By Terry White

Think of it as bankruptcy for the dearly departed. When a person’s estate doesn’t have enough assets to cover its debts, it is considered an insolvent estate. Georgia law requires any available property to first be used to satisfy debts. When there are not enough assets to go around, the law sets an order of distribution and beneficiaries -- even those named in the will -- are last in line and out of luck.

Think of it as bankruptcy for the dearly departed. When a person’s estate doesn’t have enough assets to cover its debts, it is considered an insolvent estate. Georgia law requires any available property to first be used to satisfy debts. When there are not enough assets to go around, the law sets an order of distribution and beneficiaries -- even those named in the will -- are last in line and out of luck.

Probating the Estate

An estate includes all property owned at the time of death and controlled by the deceased, such as life insurance proceeds and retirement funds. Real property held jointly with rights of survivorship is excluded from the estate because the property automatically passes to the joint holder outside of probate. To distribute assets, the estate must go through the probate process led by an executor, the estate’s overseer. Probate is the court-supervised collection of the estate’s assets by the executor, who distributes them to creditors and beneficiaries.

Protect your loved ones by a legally binding will. Make a Will Online Now

Tracking Down Creditors

It is the executor's duty to notify the estate’s creditors within 60 days of being appointed by the probate court. Notice to creditors of the debtor's death and commencement of probate proceedings must be published in a newspaper in the county where the probate proceedings are taking place. Creditors make their demands for payment directly to the executor, not the court, within three months after the final publication of this notice.

Priority of Payment

They’re standing in line with their hands out, but which creditor should be paid first? Georgia law provides a system of priorities for payment. The highest priority claim against an estate’s assets is one year’s support for the family. This award is always paid before any creditors. The deceased’s funeral bills are second in line. After those payments come the expenses of administering the estate, such as court filing fees and newspaper ad costs. The next priority is to pay the deceased’s medical bills stemming from the last illness. Unpaid taxes are next in line, followed by secured loans and other liens. Last in priority are other debts, such as unsecured credit cards.

Simply Add and Subtract

You don’t have to be an accountant to determine the solvency of an estate. If the estate doesn’t have the means to pay its debts, it is considered insolvent. Simply add up the value of the assets and subtract the debts owed to creditors. If the latter amount is greater, the estate is deemed insolvent. It’s likely the executor will have to sell personal property and family heirlooms of the estate to raise as much cash as possible to pay creditors. If, after all assets are liquidated, there still isn’t enough money in the estate to cover a debt, it typically goes unpaid. Beneficiaries stand to get nothing, even if the will leaves them specific property or specific amounts of cash.

Protect your loved ones by a legally binding will. Make a Will Online Now
How to Prove an Estate Is Insolvent in Connecticut

References

Related articles

Can an Executor of an Estate File Bankruptcy on Behalf of the Deceased in the State of Iowa?

One role of an executor of a deceased person’s estate is to receive creditor claims and pay the creditors before distributing any remaining assets to the estate’s beneficiaries. However, a deceased person can leave behind more debts than assets. In such cases, an Iowa court can declare the estate to be insolvent. Then, the executor can pay some creditors while others may remain unpaid.

Probate Law on the Deceased's Debt in Ohio

When a legal resident of Ohio dies, Ohio state law governs the handling of the deceased's assets and liabilities. Executors (who are responsible for handling wills) and beneficiaries of the estate should be aware of the general legal guidelines on debts. The most important factors are the nature of the debt — secured or unsecured — and the solvency of the estate.

Duties of the Executor of a Will in Texas

Wills often nominate an executor to administer the deceased’s estate after he dies. Once officially appointed by a Texas court, the executor must gather the assets of the deceased, notify his creditors and pay his debts and taxes. After all this is done, the executor distributes the deceased’s remaining assets to those entitled to receive them under the terms of the will.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Estate Laws for Insolvent Estates in Georgia

Georgia law considers a decedent's estate insolvent when the decedent dies without enough money to pay all of his ...

How to Prove That an Estate Is Solvent in Georgia

Georgia law defines a solvent estate as one that has the funds to cover all exemptions and pay all debts according to ...

What Does It Mean to File a Suit on an Estate?

People often leave behind property to distribute, taxes to pay and debts to settle when they die. These unresolved ...

Who Gets Paid First Out of a Deceased's Estate?

Probate is the process of settling a decedent's estate under court supervision. State law may establish an informal ...

Browse by category