What happens in Maryland if an estate has insufficient assets?

Posted by Angela Holliday Hansen Esq. | May 20, 2015 | 0 Comments

Part of administering an estate in Maryland is settling the debts of the deceased. In general, the deceased's debts will be paid from the proceeds of his or her estate. Yet what happens when there are not enough funds in the estate to pay all of the deceased's debts?

In Maryland, there is a priority order in which certain debts must be paid before others. If the estate is not large enough to fully pay all of the deceased's debts, the first item that will be paid is register fees. Next would come any expenses or costs related to administering the estate. Following that would be expenses relating to the deceased's funeral, up to $10,000 worth. After that, the estate's personal representative will be compensated, as well as any legal or real estate services.

Following the payment of those expenses, family allowances will be made. The deceased's surviving spouse can receive up to $10,000. If there are any children under age 18, each child is entitled to an allowance of up to $5,000.

After those payments, taxes owed by the deceased will be paid. If the deceased incurred medical expenses due to the treatment of his or her final illness, those expenses will then be paid. If the deceased was three months or less in arrears on his or her rent, that would be the next bill to be paid. If the deceased has to pay another person's salary, wages or commission for work done within three months of his or her death, those would be paid next.

Thereafter, if the deceased had a public assistance claim, that claim would be paid. Following that is any other claim that may be owed by the deceased. All that being said, any claims owed to the United States government receive absolute priority. Furthermore, with some exceptions, one claim will not be given preference over a second claim if the two claims are of the same class.

Estate administration is not always easy, especially when it comes to satisfying all the debts of the estate. Those who need a more detailed legal explanation about paying debts, which this post cannot provide, may want to research further what their responsibilities are, perhaps with the aid of a Maryland estate planning attorney.

About the Author

Angela Holliday Hansen Esq.

Angela Holliday Hansen, Esq., is a former big firm corporate attorney who now practices family law in Rockville Maryland. Ms. Hansen oversees complex estate administration and drafts...

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100 Park Avenue
Suite 106

Rockville, MD 20850
301-690-0383
Mon, Tue, Wed, Thu, Fri: 09:00am - 05:00pm

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