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Inventory & Accounts
Insolvent Estates

Virginia Estate Law - Inventory & Accounts

Commissioner of Accounts
Disbursements & Distributions
Insolvent Estates

If a Virginia personal representative is faced with an insolvent estate, that is, an estate where the assets are not sufficient to pay all debts, claims and expenses, it is recommended that the personal representative seek legal advice in handling the estate.

Virginia law provides very specific requirements for handling insolvent estates. Failure to follow the statutory requirements can result in disapproval of fiduciary accountings by the commissioner of accounts and personal liability on the part of the personal representative.

Generally, where an estate is insolvent, Virginia law provides a specific priority of payment of debts and claims. For example, costs and expenses of estate administration, family allowance, exempt property, homestead claims, and funeral expenses to the extent of $3,500 have high priority of payment. Federal debts and taxes, medical expenses to limited amounts, and debts and taxes payable to Virginia have priority over other debts and claims. Debts of a superior class must be paid before debts of an inferior class are paid. The statute must be reviewed for specific classifications.

In the case of an intestate estate , where there is no will or power of sale over the decedent's real estate, and where the personal property of the estate is not sufficient to pay the debts and claims, the administrator may petition the court to grant power of sale over the real estate in order to pay debts of the estate.

Personal representatives should seek legal advice before making any disbursements or distributions (including household items and other personal property) where the estate is insolvent.

It is not uncommon for personal representatives to promptly pay a funeral bill after they have qualified. If it turns out that the estate is insolvent, the personal representative may be required to reimburse the amount of that bill in excess of $2,000.

It is also not uncommon for a personal representative to make mortgage payments on the decedent's former residence. Again, if this violates the statutory priority of payment for an insolvent estate, the personal representative may have personal responsibility.

Advice related to the specific circumstances of the estate should be obtained.

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