What debts should be taken into account when determining whether an estate is insolvent?

To determine whether an estate is solvent or insolvent, it is not enough to compare the value of the deceased's assets with the outstanding balance of their loans. It is necessary to establish, as fully as possible , all the debts and obligations that will have to be settled during the liquidation process .

It may be necessary to take into account, in particular:

• credit card and line of credit balances;
• personal loans and other borrowings;
• mortgage debts;
• unpaid invoices and accounts;
• sums owed under a contract;
• taxes and other tax debts of the deceased;
• valid claims that can be made against the estate;
• costs and other obligations arising from the liquidation of the estate.

Some debts may not be immediately known at the time of death. Others may be disputed, conditional, or difficult to assess. It may therefore be necessary to consider these factors before concluding that the estate has sufficient assets to meet all its obligations.

Debts secured by property, such as a mortgage, must also be considered. To assess the true financial situation of the estate, one must take into account not only the value of the property, but also the debt encumbering it.

The inventory of the estate therefore plays an important role in establishing the assets and debts of the deceased and enabling the liquidator and the heirs to assess more adequately whether the estate is solvent or insolvent.

When certain debts remain unknown or uncertain, it is prudent to avoid distributing assets to the heirs before the financial situation of the estate has been sufficiently established.