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Home » Estate Litigation » New Jersey estate litigation: When an estate is insolvent

Closing out a loved one’s estate is never an easy task. In New Jersey and elsewhere, the executor of an estate has the difficult job of paying off creditors before anything can be distributed to beneficiaries. Depending on the amount of debt left behind, this can take awhile and, if there is not any money or assets left, paying creditors may not be possible at all. This can lead to costly and time-consuming estate litigation.

When someone dies, it seems that a lot of people come out of the woodwork in order to try to collect money supposedly owed to them. The executor of the estate has to take the time to establish which claims have merit and should be paid. Sounds easy enough, but sometimes this can be a rather arduous task.

The truth is, not all debts have to be paid from an estate, and not all debts are legally enforceable. Some debts are tied to their assets, such as mortgages and auto loans, meaning that beneficiaries who take over these properties also take over the debt responsibility. What happens, though, if creditor claims are valid but there just is not enough money to go around. This is when the executor may seek to have an estate declared insolvent.

In New Jersey and elsewhere, there are certain steps that must be taken in order to have an estate declared insolvent. An experienced attorney can help with this. In doing this, it may be possible to avoid estate litigation and simply pay top priority debts.

Source:, “How to Pay the Decedent’s Debts and When to Declare Insolvency“, Margaret Atkins Munro and Kathryn A. Murphy, Accessed on Oct. 2, 2017