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Kaufman & Canoles, PC - Attorneys
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If a Virginia personal representative is faced with an insolvent estate, that is, an estate where the assets are not sufficient to pay all debts, claims and expenses, it is recommended that the personal representative seek legal advice in handling the estate.
Virginia law provides very specific requirements for handling insolvent estates. Failure to follow the statutory requirements can result in disapproval of fiduciary accountings by the commissioner of accounts and personal liability on the part of the personal representative.
Generally, where an estate is insolvent, Virginia law provides a specific priority of payment of debts and claims. For example, costs and expenses of estate administration, family allowance, exempt property, homestead claims, and funeral expenses to the extent of $3,500 have high priority of payment. Federal debts and taxes, medical expenses to limited amounts, and debts and taxes payable to Virginia have priority over other debts and claims. Debts of a superior class must be paid before debts of an inferior class are paid. The statute must be reviewed for specific classifications.
In the case of an intestate estate , where there is no will or power of sale over the decedent's real estate, and where the personal property of the estate is not sufficient to pay the debts and claims, the administrator may petition the court to grant power of sale over the real estate in order to pay debts of the estate.
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