Insolvent Estates

Not all decedents have vast estates. Some estates are insolvent, that is, they do not have enough money to pay all their debts. Is the executor still entitled to be compensated despite in such cases? If so, how can he or she be compensated?

When an estate is declared insolvent, the probate court will typically maintain jurisdiction over all claims against the estate. Creditors may nominate to the court any fit individuals who can be administrator. Once appointed by the court, the executor or administrator is duty bound to notify creditors of the insolvency of the estate. It is incumbent upon the judge of probate to ensure that notice by publication is duly made by the executor or administrator. Failure to notify creditors of such insolvency will often render executor’s claim for compensation futile. See e.g. In re: Estate of Rolfe, 136 N.H.  294 (N.H. 1992).

In case of insolvency, the estate is distributed equally among all the creditors, unless otherwise classified by law as preferred creditors. An executor’s claims for fees have equal footing with the other obligations owed by the estate. Thus, executor’s fees become a claim against the estate.