What to Do if There Are Not Enough Assets in an Estate

When there are not enough assets in an estate in New York to pay all creditors, it is still the job of the executor or personal representative of a decedent’s estate to administer and wind up the decedent’s estate by filing a probate proceeding in the New York Surrogate’s Court. Part of the duties of the personal representative is notifying creditors of the decedent’s death, taking inventory of assets, investing and selling assets, paying creditor’s claims and estate taxes and distributing assets to beneficiaries.

The Priority of Claims in a New York Estate

Generally, the priority of paying probate claims in New York is as follows:

  1. Funeral and burial expenses
  2. Administration expenses and attorneys’ fees
  3. Estate and personal taxes owed by the decedent
  4. Medical bills relating to the decedent’s death or any illnesses that was the cause of death
  5. Judgments
  6. Secured debts such as mortgages or car loans
  7. Unsecured debts such as credit card bills

Valid Creditors Have Priority Over Beneficiaries

Each creditor must file a claim with the estate in order to get paid. If there is not enough money in the estate to pay claims, the personal representative will have to decide which creditors’ claims to pay. Since a personal representative can be held personally liable to the estate and the beneficiaries for paying invalid or excess claims, a personal representative will do well to seek legal advice from an experienced New York estate attorney before paying any claims or distributing assets to the beneficiaries.

Under New York Probate Laws, beneficiaries will not be able to receive their distributions under the decedent’s will if there are not enough assets left to pay claims. All claims must be paid first. Neither the personal representative nor heirs or beneficiaries are liable for paying the claims and debts if there are not enough assets. Debtors may not try and collect the debt from the heirs or beneficiaries or the personal representative. The creditors must settle for whatever they can receive in payment from the estate. Some creditors may end up receiving nothing and have to write the debt off their books. When there is secured debt such as a home or other real property mortgage lien or a car loan, the creditor may foreclosure and take back the property. If there is a co-signer on the account, whether it is a secured or unsecured debt, the co-signer will be responsible for paying the debt.

Since New York Probate matters especially those pertaining to insolvent estates when there are not enough assets to pay everyone can be complex, it is recommended that the estate hire a New York Probate Attorney to assist with the determination and validity of claims and the determination of liability of the decedent’s debts.

If you wish to speak to a New York estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233.

Attorney Albert Goodwin

Law Offices of
Albert Goodwin, PLLC
31 W 34 Str, Suite 7058
New York, NY 10001

Tel. 212-233-1233

[email protected]

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