What is an estate referred to when it is unable to pay the debts of the deceased?

An estate is referred to as an insolvent estate when it does not have sufficient assets to cover the debts and obligations of the deceased. In the context of probate, when an estate is classified as insolvent, it indicates that the total liabilities exceed the total assets. This designation is significant because it affects how creditors are paid and the distribution of any remaining assets to beneficiaries, if there are any. When an executor or administrator is managing an insolvent estate, they have to follow specific legal procedures to handle the claims from creditors, which may involve determining the priority of debts and potentially seeking court intervention to resolve disputes.

In contrast, a solvent estate is one that has enough assets to pay off all its debts, while an equitable estate relates to property rights and ownership issues that may involve trusts or equitable claims. A trust estate refers specifically to property that is managed under the terms of a trust, which is a fiduciary arrangement for managing assets for the benefit of another. Therefore, identifying an estate as insolvent is crucial for understanding its financial situation and the implications for settling outstanding debts.