Settlement of an insolvent succession

You are the liquidator or heir of a succession which is insolvent because the assets of the succession are insufficient to pay all the debts as well as to deliver the legacies to legatees by particular title. Therefore, you will have to make one of the following choices:

• Renounce to the succession;
• Accept the succession.

If the heirs do not want or cannot renounce the succession by reason, among others, of the following elements:

• The heirs want to keep or redeem certain property (car, land or works of art);
• The surviving spouse owes sums of money to the succession following the liquidation of the family patrimony and the matrimonial regime.

In such circumstances, the heirs can ask the liquidator to proceed to the liquidation of the succession and that, while respecting each of the steps provided for in the Civil Code of Quebec.

The liquidator, so that the responsibility of the heirs for the debts of the deceased be limited to the value of property they would receive, will have among others to:

• Proceed to the preparation of an inventory;
• Publish a notice in the RDPRM;
• Publish a notice in a newspaper circulating in the locality of the last known address of the deceased.

The liquidator who must proceed to the liquidation of an insolvent succession has no greater responsibility than the liquidator of a solvent succession, that is to say that everyone must respect the rules of the Civil Code of Quebec.

However, the liquidator of an insolvent succession will have additional steps to perform, being:

• Prepare a statement of the debts and legacies;
• Prepare a payment proposal;
• Obtain homologation, by the court, of the payment proposal before paying the creditors and legatees by particular title.

The liquidation of an insolvent succession is interesting to the extent that there is sufficient equity to make a payment proposal to the creditors. Therefore, each case of insolvent succession must be the subject of analysis before taking a decision as for the alternative to be chosen.