What happens when indebtedness out weighs assets?
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What happens when indebtedness out weighs assets?
For example A personal diamond ring was left to a named granddaughter valued at 10,000 in a Will. However there are household bills, overdue taxes and judgments against the estate that are $25,000. Do this ring get sold to pay the indebtedness or does the granddaughter inherit the ring free and clear?
Asked on July 4, 2018 under Estate Planning, Nebraska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Creditors have to be paid before heirs inherit. The creditors must actually put in claims against the estate, but if they do, then, those claims will need to be paid from estate assets. Paying those claims would require selling any assets (like the ring) if there is insufficient "cash" (e.g. money in the deceased's bank accounts) to pay the debts.
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