The loss of a loved one is hard enough on its own without money issues. If you are facing additional financial problems, call on competent professionals to accompany you like Richard Killen Associates working in all over the Canada to assist people to be debt free.
Are you the heir or the liquidator of a succession whose amount of debts is greater than the value of the assets? This type of succession is called insolvent. Indeed, even by liquidating all the assets (bank accounts, investments, RRSP, house, car, etc.) we could not fully reimburse the creditors.
If so, you must act carefully so as not to inherit the debts and If you simply accept the estate, you will be liable for all related debts.
Several years ago, it was quite rare to encounter cases of insolvent succession, but with the increase in debt among our elders , this scenario has become the reality of many Quebecers. In fact, the age group that experienced the strongest increase in bankruptcies between 2012 and 2015 is that made up of those aged 65 and over. The increase in just three years amounts to +30.3%. It is not uncommon for a loved one to hide the extent of their financial problems, until the day when this is no longer possible.
If you are going through an insolvent succession scenario, consult a licensed insolvency trustee (LIT) so that he or she clearly explains all your options to you.
Your options in the Face of an Insolvent Estate
1. Accept the Estate
By accepting the succession, you inherit the assets, but also the debts. Caution is required when there is an ambiguous situation, especially if the complete financial situation of the deceased is not known. Option which is to be avoided because it jeopardizes your own financial situation.
2. Refusing the succession
By refusing the succession, you do not inherit the debts, but you are also not entitled to the assets.
3. Bankrupt the estate
This third option offered by a licensed insolvency trustee consists of putting the estate into bankruptcy and thus settling the debts according to the Bankruptcy and Insolvency Act .
In an insolvent succession situation, this option has several advantages:
· You are not responsible for the debts of the estate.
· Eliminates delays (and avoids recourse to curatorship).
· The trustee takes care of all the administration and therefore frees the liquidator from all the hassle related to the estate (problems with creditors, legal proceedings, etc.).
· The trustee will not automatically seize all the assets of the estate. Family heirlooms, religious objects and goods with no significant market value will be returned to you.
· The trustee having the seizin of the assets, the latter will proceed without delay to the realization of the assets.
· Advantage of settling the cases of undivided assets more quickly
· You can offer the trustee to buy the property you want to keep. For example, it would be possible to offer the trustee to buy the residence of the estate or the car that belonged to the deceased.
· Funeral expenses and other reasonable testamentary expenses will be paid by the trustee, provided funds are available.
· The bankruptcy of the estate does not affect the finances or the credit file of the heir or the liquidator.
Caution
Be careful not to accept the succession automatically and by taking actions that could be irreversible towards the liquidator, such as:
· By appropriating the assets of the estate,
· By transferring bank balances to you or
· By not officially renouncing it within the prescribed period of six months
Make an appointment with a Licensed Insolvency Trustee to learn more. You can consult us free of charge, without obligation and in complete confidentiality.