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Closing The Insolvent Estate In Connecticut


Angela’s father passed away last month. He did not leave a will or clear instructions about his finances, bills, or how he wanted his property divided. Now Angela has started to get past due bills for utilities, credit card bills, a payday loan and the mortgage on her late father’s home. She also visited the bank and learned there is less than four hundred dollars total in her father’s checking and savings accounts, and that he had no other investments, equities or property. This comes as a shock to Angela as her father never seemed to complain or worry about money. Is Angela responsible for paying her father’s debts down? How does she close his estate if her father owed more than he possessed?

What is an Insolvent Estate? 

An insolvent estate in an estate where the decedent’s liabilities exceed his or her assets. A liability is an amount owed to a creditor. It could be a simple IOU letter to a friend, or it might be a secured debt such as a second mortgage on the primary residence. An interest is considered “secured” if the debt is secured by collateral (like a home or a car). Unsecured debt includes credit card debt or a payday loan, because the creditor does not have anything to foreclose on or repossess to ensure the debtor pays back what she or he owes. When an estate is declared insolvent, all creditors are notified, but creditors with a perfected security interest are paid from the estate first. The executor or fiduciary can request that the court allow the executor to handle payment of creditor claims without the use of claim procedures, or adhere to claim procedures under CT. Gen. Stat. § 45a-378.

Because there is a procedural process to closing the insolvent estate, it is critical that you meet with an experienced estate and probate attorney soon after the passing of your loved one. This is especially true in cases where the decedent died intestate (without a will) and without nomination of a fiduciary or an estate executor. The sooner you can identify the estate’s assets and liabilities, the sooner an estate can be opened and the process begins to winding up affairs.

Closing the Insolvent Estate 

Closing the insolvent estate is not an impossible feat; however, there are specific requirements the executor must complete in order to do so. The executor must notify all creditors of the estate opening in the court of jurisdiction. However, priority claims are settled before a creditor can seek a share of what remains in the estate. Priority claims include funeral expenses, court costs and fees for opening the estate, and possibly back taxes (such as property or income taxes) owed to the state. 

If the assets in the estate are truly miniscule, the executor can request the court to administer a “small estate”.  Small estates eliminate the 150 day waiting period for creditors to file a claim against the estate. The total value of the estate must be less than $40,000. To do so, the executor needs to file an affidavit of administration with the presiding court. CT. Gen. Stat.  §45a-273. Otherwise, the probate court requires the executor to file a notice of insolvency and publish the notice in local newspapers in addition to personally notifying the estate’s creditors. CT. Gen. Stat. § 45a-376. 

Contact Canton Probate Attorney Brian S. Karpe 

If you recently lost a loved one and are concerned about how to proceed, look no further for answers. Canton estate planning attorney Brian S. Karpe understands how difficult it can be making sense of a loved one’s estate, especially if the estate is insolvent. He will assist you throughout the entire process, and you can trust that you are in good hands. With decades of experience and advanced legal training, Attorney Karpe is the right choice. Call today to schedule a consultation.



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