How to Probate a Washington Descendant's Estate ---
To "Do It Yourself" without a Lawyer

An Insolvent Estate

  1. Before Grant of Nonintervention Powers
  2. After Grant of Nonintervention Powers
  3. Payment of Estate Liabilities (eg, Creditor’s Claims)

Before Grant of Nonintervention Powers

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.

After Grant of Nonintervention Powers

The estate appears to become insolvent:  After being granted Nonintervention Powers, you may receive Creditor’s Claims such that:

  1. Their aggregate face value, when added to
  2. The other debts and the taxes and expenses having greater priority (eg, see RCW 11.76.110),

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):

Timing:  Within 10 days of your receiving the Creditor’s Claims that appear to cause the estate to be insolvent.

  • The estate 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 requirements:
  • Payment of Estate Liabilities (eg, Creditor’s Claims)

    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:

    1. “Ranking:”  Assigning each liability to one or another of a prioritized series of classes set forth in RCW 11.76.110:
      • 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, servants’ wages);
      • Debts having 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 reimbursement);
      • Judgments rendered 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).
    2. Paying:
      • Starting with the top class, all the liabilities within that class are paid (in Washington, presumably) according to their pro-rata share.
      • 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.

     

    Handling Creditor’s Claims