The Insolvent Estate

You’ve done a great job as executor thus far.  You understand your primary duties, and you’ve been working on your executor duties, even completing items in your custom plan.  But as you are looking at the estate assets compared with the estate debts, you begin to realize that there are more debts than the assets can cover.  

What do you do if there are more debts than money in the estate?

The Insolvent Estate

When an estate does not have enough money to pay the debts of the deceased, the estate is called “insolvent.”  When this occurs, there are laws in each state that determine the order in which debts should be paid until all the money runs out.  An executor should work with the estate attorney or probate court to ensure the order is properly followed.  

Jointly Held Debt

As an executor, you may get questions about debts the deceased held jointly with another person or persons.  It is best to consult with the estate attorney or probate court in these instances because joint debts can remain in the name(s) of those debtors still living, meaning that those still living are responsible for paying the outstanding debt.  

The Executor and Estate Debt

As executor, you are not personally responsible for the deceased’s debts unless you were already jointly responsible for that debt.  An executor does not take on the deceased’s debts because they are serving in the executor role.  That is not part of the executor duties.

The same is true of beneficiaries with a few exceptions.  As before, if a beneficiary was already jointly responsible for a debt, they aren’t off the hook because of the death.  

And family members (usually spouses) of the deceased could be responsible for individual debts of the deceased in certain states because of laws about how property is held.  It is best to check with an attorney or the court if there are questions about these laws.  

Moving assets

Finally, if it seems that the deceased transferred some assets in their estate just before death for the purpose of keeping them out of the hands of debtors, the creditor may come after these assets to try to get them even if the recipients did not know about the debt or reason for transfer.  


Insolvent estates are unfortunate but not uncommon.  If you are an executor of an insolvent estate be careful to follow laws and the court’s instructions when serving in the executor role.  Your executor duties are no less important even if they are not as fun as distributing assets to beneficiaries.  

To learn more about your specific duties as an executor, and how to settle an estate in the most cost effective way, visit our home page and begin the process of creating an account.  An account is only $96 per year, less than the cost of talking to an attorney for 15-20 minutes. It also comes with a 30-day money back guarantee, so there’s no risk in getting started today.