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WA-Probate > Probate Instructions > Administering the Estate > An Insolvent Estate
Before Grant of Nonintervention Powers
After Grant of Nonintervention Powers
Payment of Estate Liabilities (eg, Creditor's Claims)
A. Before Grant of Nonintervention Powers ñ
One of the requirements for obtaining Nonintervention Powers is that the estate is solvent. RCW 11.68.011(2) Consequently, if the estate is insolvent at the hearing on your Petition for Letters, you are ineligible to be granted Nonintervention Powers.
B. After Grant of Nonintervention Powers ñ
Caution: If after you receive Nonintervention Powers:
The estate appears to
become insolvent: After being granted Nonintervention
Powers, you may receive Creditor's Claims such that:
Their aggregate face value, when added to
The other debts and the taxes and expenses
having greater priority (eg, see
exceeds the apparent value of the property in the estate --- appearing to cause the estate to be insolvent. If this occurs (or for any other reason, you become aware that the estate may be insolvent):
Mail a copy of the Notice to:
All the Beneficiaries if Decedent died with a Will;
All the Heirs if any property in the estate passes other than by Will;
All the unpaid creditors to the extent that his/her/their claim has not then become barred, for example, by a statute of limitations; and
File the original of the Notice with the Court (and get a conformed copy). RCW 11.68.080(1)
Timing: Within 10 days of your receiving the Creditor's Claims that appear to cause the estate to be insolvent.
does become insolvent:
If this occurs, you are
required to petition the Court for instructions in a noticed hearing.
RCW 11.68.080(2) To petition the Court and satisfy the notice
Timing: Within 10 days of your receiving the Creditor's Claims that cause the estate to be insolvent.
Determine when probate petitions are heard at your Courthouse.
Select a suitable date and time for the hearing on your Petition, making sure that your proposed hearing date is at least 20 (+3) days into the future.
Attach to your Notice a copy of your Petition and make sufficient copies of that combined document (Notice + Petition).
Mail a copy of that combined document (Notice + Petition) to each person entitled to notice:
Decedent's unpaid creditors, and
Timing: At least 20 days (+3 more days for giving notice by mail; total = 23 days) before the hearing.
At Court, file and obtain a conformed copy of your:
Notice of Hearing & Declaration of Mailing.
Timing: At least 20 days before the hearing.
At least in King County: File Working Copies including a proposed Order with the Probate Department at least 7 days before the hearing.
Attend the hearing on your Petition. Assuming no one objects to your Petition, the Judge will likely ask you for a proposed Order. Hand it to the Judge (or to the clerk for the Judge) for his/her review and signature and return to you. It would be better practice for you to return the file and the signed Order to the Clerk's Office and obtain a copy of the signed Order for your records.
C. Payment of Estate Liabilities (eg, Creditor's Claims) ñ
Insolvency itself has no bearing on allowance of Creditor's Claims, only on their payment. (Allowance concerns only the validity of a Claim, not whether the estate has funds to pay it.) Payment of Creditor's Claims, taxes, and other expenses of an insolvent estate is handled by:
Assigning each liability to one or another of a prioritized series of classes
set forth in
Costs of estate
administration (eg, filing fees, your commissions, your counsel's
attorney's fees, accounting fees, appraisal fees, etc.);
Funeral expenses (eg,
funeral and burial expenses);
Expenses of last
illness (eg, doctors' and hospital bills);
Wages due for labor
performed in the period beginning 60 days before Decedent's death (eg,
preference under federal law (eg, federal income, gift, and estate
taxes); Caution: Estate of Shoptaw,
54 Wn.2d 740 (1959), negates this ranking by finding that federal law takes
precedence over expenses of last illness, so federal taxes are to be paid after costs of administration
and then funeral expenses but before
any lower rank.
Taxes or other debts
due to the State (eg, property taxes, business taxes, WDSHS
against the Decedent during his/her lifetime, which judgments are liens on real
estate on which an execution might have issued at date of death, and debts
secured by mortgages in order of their priority, and (finally)
All other demands
against the estate (eg, most ordinary Creditor's Claims,
typically, credit card debt).
Starting with the top class, all the
liabilities within that class are paid (in Washington, presumably) according to their
If the assets of the estate are sufficient to pay all of those liabilities within one class in their entirety, then all the liabilities within the next lower class are similarly paid --- in full if sufficient assets are available, pro-rata if not. This payment process continues serially from one class to the next lower class until the assets are exhausted. Within the final class, the creditors will each receive less than his/her/their full Claim, and no creditor in any lower class will receive anything.
The Washington statute does not expressly provide for it, but other similar statutes, such as that of the Uniform Probate Code, provide that "No preference shall be given in the payment of any claim over any other claim of the same class, and a claim due and payable shall not be entitled to a preference over claims not due." See, for example, Montana Code Annotated 72-3-807(2). No Washington case has yet been found directly on point on this issue.