I was speaking with a couple following one of my live educational events and the wife of this husband and wife couple discussed with me her late father’s estate. The wife explained to me that her father had passed away a few weeks ago and she was concerned that there was not going to be enough money to pay for all the expenses of her late father’s estate. This following list was the expenses that needed to be paid from her late father’s estate:
- Funeral Bill of $15,000
- Attorney Fees of $9,000
- Vanderbilt Medical Bill of $42,500
- Fifth Third Credit Card Bill of $2,500
- Chase Credit Card Bill of $48,750
- Electric Bill of $225
- Other Miscellaneous Bills Totaling $1,250
In total, there was $119,225 in debts and other claims made against her late father’s estate. However, this woman told me that her father assets only totaled approximately $75,000. This woman expressed a concern that she was going to have to pay for the remaining bills out of her pocket. Also, she did not know if her and her two brothers would be receiving any assets from her late father’s estate.
I explained to that this is what the law refers to as an insolvent estate. This is where the claims and debts against the estate exceed the assets in the estate. I discussed with this couple that under Tennessee law, when an estate is insolvent claims will be paid in the following priority:
- Costs of Administration
- Reasonable Funeral Expenses
- All Other Claims
I discussed with this couple that first the court costs and attorneys fees would be paid and then the funeral bill would be paid leaving $51,000 of her father’s assets. I explained that the remaining bills and expenses, the medical bill, credit card bills, electric bill, and all the miscellaneous other bills would be paid pro rata from the remaining $51,000.
Finally, I explained that although she would not be held personally liable for these other debts, her and her two brothers would not receive any assets from her father’s estate as the debts exceeded the amount of assets in her father’s estate. However, I again explained to this woman that she does not need to pay the overage, even if these creditors contact her attempting to collect payment.
If you have questions about probate in Tennessee, administering an insolvent or solvent estate, estate planning, avoiding probate, or any other estate planning topics, then I encourage you to attend one of our free live educational events scheduled this month. At these events, you will hear a lot of real life stories about families that paid thousands of dollars in unnecessary expenses, families that were able to avoid unnecessary expenses, and families that were able to protect their assets from unnecessary nursing home costs and expenses.
I look forward to speaking with you at one of our live upcoming events.