When an estate plan is created, it is important to appoint an executor. This is a person who takes care of the responsibilities that come with administering the estate to its rightful beneficiaries. There are various tasks that must be completed before their job is done. Out of all the duties they have during this time, an executor may wonder if it is possible for them to file for bankruptcy on behalf of the deceased. To learn more, continue reading below and speak with an experienced New York estate planning attorney.
Can an Executor File for Bankruptcy?
When a person dies, their property belongs to their estate. This includes personal property, real property, tangible assets, intangible assets, and debts. Assets are usually meant to go to any designated beneficiaries. However, there are sometimes cases in which this can change, such as if the deceased left behind significant debt. When this happens, loved ones may wonder if it is possible to file bankruptcy to prevent them from losing the assets they were supposed to inherit.
Bankruptcy Code 11 U.S.C. Section 109 states that only an “individual” can file a Chapter 13 Bankruptcy case. This means that an estate is not eligible to file, therefore an executor of the estate cannot do so. When an estate is created, creditors are able to file claims with the court about what they are owed. If the assets exceed the amount owed in debt, beneficiaries can inherit what is leftover as it applies to the deceased’s wishes. However, if the debts exceed the assets, the assets can be liquidated to pay off the debt. When this happens, the remaining debt can then be written off and beneficiaries will not have anything to inherit, making it unnecessary to file for bankruptcy.
While this is true, a beneficiary can save a certain piece of property if they wish to do so. If they were meant to inherit a property and it is subject to mortgage and foreclosure, they may be able to file for bankruptcy to stop the foreclosure sale. It is important to note that this can only be done as long as the individual would have otherwise been eligible to file their own Chapter 13.
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The Lauterbach Law Firm is proud to serve clients throughout Rockland County who are faced with legal matters related to estate planning, real estate, foreclosure defense, landlord-tenant law, business law, and criminal defense. If you require the services of an experienced team of attorneys, contact The Lauterbach Law Firm today to schedule a consultation.