What Is An Insolvent Estate And What To Do If You Inherit One
February 16, 2021 (Investorideas.com Newswire) Nowadays, it's pretty much impossible to live comfortably in a civilized society without accruing any amount of debt. Owing money throughout our whole adult lives to various creditors is endemic to our civilization at this point. Debts can even transcend the debtor's death - pretty much everyone knows that, though most people are pretty hazy on the details.
This is why it's only logical to expect to inherit some debt alongside the estate of the recently departed. Generally speaking, everything should be fine if the estate in question has more assets than it has debt attached to it. However, if you have any inkling that the opposite may be the case, you will need to tread carefully, as you may be walking on thin ice.
Inheriting an insolvent estate is a serious issue that may land you in a whole new world of grief. This is why consulting a professional like the London insolvency practitioners Hudson Weir is strongly advised.
What is an Insolvent Estate?
When a person departs, their debts and assets don't disappear into thin air. Instead, all material possessions, as well as their liabilities, are bundled up into what is collectively known as the deceased's estate.
An insolvent estate is an estate that includes more debts than the current monetary value of the assets it includes. Usually, this comes about as a result of the depreciation of the value of assets, unwise investments, or excessive borrowing on the part of the deceased.
Regardless of the reasons that may have contributed to the estate's insolvency, there are some very specific steps you should take when dealing with the situation.
Ascertain the Estate's Value
Getting a professional to ascertain the total value of the assets contained in the estate, and then weighing it against the debts it carries is the only right way to go here. It's very important to be absolutely sure what the value of the estate is before proceeding any further.
Familiarize Yourself With Your Rights
As a beneficiary, you have a right to receive the estate of the deceased wholesale. If you decide to do so, you will receive ownership of the assets and be burdened with the debt that comes with it. However, note that inheriting this estate is your right - it's not an obligation.
This means that if an estate is insolvent, you can just wash your hands of the whole thing. Simply take the appropriate actions to declare that you will not have anything to do with the whole ordeal, and that's the end of the matter, as far as your involvement goes. Any other concerned party will have to pay an administrator to liquidate the assets and use the proceeds to pay as much debt as possible. It is a long and difficult process, that is someone else's problem.
Deciding to Inherit an Insolvent Estate
You can still choose to accept an insolvent estate, even though doing that would be a net loss to you. Maybe some of the belongings have sentimental value to you, or you think that their monetary value may increase over time, which would make taking on the debt a worthwhile investment.
In any case, if you are even considering doing so, you should consult an insolvency practitioner, as the process can be very long and complicated. It usually includes all of the steps involved in personal bankruptcy, with a few dozen more for good measure.
So before you sign off on anything regarding a potentially insolvent estate consult a professional and consider all your options.
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