As a general rule, a Georgia decedent's estate must go through probate whether it is solvent or insolvent. When the decedent leaves behind a will naming an executor, the probate court appoints that person to serve as personal representative and settle the estate. When there is no will, family members or others can petition the probate court, and the court chooses an appropriate personal representative.
An essential first step in probating any estate is to determine how much the decedent owed at death, and to whom. Georgia law requires a personal representative to publish a Notice to Creditors within 60 days of being appointed. This notice informs the creditors of the decedent's death. It also lets them know that they must serve their claims on the personal representative within four months of the notice's initial publication date.
Once the personal representative has reviewed all creditors' claims and determined which ones are valid, he must determine whether there are enough assets to pay all the decedent's final bills and debts. When the debts of an estate exceed the assets, the estate is insolvent.
The personal representative of an insolvent estate must use the existing assets to pay as many debts as possible, in order of priority. Under some circumstances, the decedent's surviving spouse and children are entitled to a special allowance called Year's Support. This is the first priority for payment. Next are the decedent's funeral bills, followed by the necessary expenses of administering the estate. The expenses of the decedent's last illness are fourth priority, with outstanding taxes paid fifth. Finally, if enough money is left over, the personal representative pays the decedent's secured debts, followed by any unsecured debts.
When a personal representative fails to pay the decedent's debts in the appropriate order, he can be held personally liable for debts that should have been paid but were not.
All the debts of an estate must be paid before any assets can be distributed to the beneficiaries. When an estate is insolvent, not only are some of the decedent's creditors left out in the cold, there's nothing left over for surviving family members.
