Frequently Asked Questions
How do I know if the deceased’s estate is insolvent and should be declared bankrupt?
To determine whether the estate is insolvent, it’s necessary to compile a list of all assets, their estimated values, the costs to realize on each asset, and any secured loans against each asset to estimate their total realizable value. It’s also worth considering how difficult each asset is to convert to cash. Appraisals can help estimate the value of an asset. It’s also necessary to determine what is owed by the deceased by compiling a list of debt including bank loans, credit cards, taxes owed, personal loans, business debt, and any shortfall on secured debts where the value of the asset is less than the sum owed. Additionally, it’s important to determine if any other party co-signed debt for the deceased, leaving them responsible if the estate is unable to pay creditors. Finally, it’s also necessary to take funeral costs into account, which always get priority payment.
What are my responsibilities as an executor?
If you were named in the deceased’s will as executor of their estate, certain responsibilities become yours. While you’re not automatically liable for the debts of the deceased, you are liable for ensuring that the debts of the deceased are handled properly. For instance, an executor is liable if they distribute funds to beneficiaries without first making sure that all creditors are paid in full. If creditors can’t be paid using estate assets, it’s time to consider filing for estate bankruptcy.
Do I have to act as executor?
If you’ve been named executor or estate trustee but you decline to act or cannot fulfill your designated role for any reason, the beneficiaries can nominate another person. An estate trustee can also be appointed by the court if there is no will, no estate trustee named in a will, or the validity of the will has come into question.
How can a Licensed Insolvency Trustee help administer a deceased estate?
Getting an LIT in your corner can make all the difference in the administration of a deceased estate. For starters, an LIT can prepare an affidavit on behalf of the executor outlining why the deceased is insolvent. A listing of the deceased’s assets and liabilities acts as proof of the estate’s insolvency. Your LIT will then make a motion before the court to seek an order to place the deceased estate into bankruptcy. Once this order is obtained, your LIT will prepare the necessary documents to officially file for bankruptcy on behalf of the deceased estate. Your LIT will then assume control of the estate, administering assets and distributing any available funds to creditors in accordance with the Bankruptcy and Insolvency Act.
