When someone passes away, you may expect to receive an inheritance from their estate. However, the estate may not have enough money or assets to provide everything the will promises. In this situation, the amount you receive may depend on the estate’s debts, available assets and the terms of the will.
What happens when an estate has more debts than assets?
When an estate lacks enough assets to cover its debts and expenses, Maryland law sets the order for paying claims. The personal representative must follow this order before distributing any remaining property to beneficiaries.
Some expenses and debts receive priority over others, so beneficiaries may receive less than the will provides or nothing at all if no assets remain.
What happens to beneficiaries after debts are paid?
After the estate pays its valid claims and expenses according to Maryland law, the personal representative can determine what remains for distribution. Your inheritance may depend on the remaining assets and the terms of the will. Consider these possible outcomes:
- Reduced inheritance: You may receive less than the will originally intended if the estate has limited assets.
- No inheritance: You may receive nothing if no assets remain for beneficiaries.
- Property instead of money: You may receive property from the estate if the will and applicable law allow that distribution.
If you expect an inheritance, remember that a will cannot guarantee payment if the estate lacks sufficient assets.
Can other assets help cover your inheritance?
Not every asset passes through probate. Depending on how the deceased person owned their property and named beneficiaries, certain assets may pass directly to someone else or through a trust. For example, life insurance proceeds and payable-on-death accounts may go directly to named beneficiaries rather than become part of the probate estate.
If you expect an inheritance, reviewing how assets are titled and who receives them can clarify which property may be available for distribution through probate.
Plan to protect your inheritance
If an estate cannot fully pay its beneficiaries, you may receive less than expected or nothing at all. Reviewing your estate plan and keeping your will and beneficiary designations up to date can help reduce confusion and support your wishes. A Maryland estate planning professional can help you plan for the future.