Paying an Estate’s Debts: Who is Responsible?

If you or someone you know is grappling with the loss of a loved one, and such loss is accompanied by that decedent’s outstanding debts, you may be trying to figure out who is responsible for paying those debts. This is an understandable question, and the answer depends on whether the estate was solvent or insolvent.

A solvent estate is one that has enough assets to be able to satisfy the outstanding debts of the decedent, and still have enough left over for distribution among the survivors. An insolvent estate is the opposite, in that there are not enough assets in the estate to be able to satisfy all of the outstanding debts; as a result, the administrator (i.e., person responsible for winding up the affairs of the decedent) of the estate will need to sell off assets to try and satisfy these debts. However, since the estate’s total value is insufficient to cover all of the debts, the creditors will likely only receive a portion of what is owed.

In determining whether or not an estate is solvent or insolvent, it’s very important that the administrator of the estate not only conducts an exhaustive inventory of the estate’s assets, but that the total value of those assets are correctly tabulated; an error in the math may mean the difference between the decedent’s heirs getting nothing or something. The good news, however, is that if an estate is insolvent, the heirs will not be responsible for the amount that is left unsatisfied after the pilfering of the estate.