B.I.G. Probate Law
By Berel Goldberg
October 23rd, 2025
When someone dies owing more money than their estate contains, the situation becomes an insolvent estate. Understanding the laws governing insolvent estates is crucial for anyone appointed as an estate trustee.
An insolvent estate in Ontario occurs when the deceased person’s debts exceed the value of their assets. This creates serious legal challenges for estate trustees (executors), who must navigate complex rules about paying creditors while avoiding personal liability for the deceased’s debts.
Estate trustees face significant personal risk if they mishandle the distribution of assets or fail to follow the proper order of payments to creditors.
The Ontario Bankruptcy and Insolvency Act governs how insolvent estates are managed. This federal legislation sets the legal framework for determining insolvency status. The administration process involves identifying exempt assets, establishing creditor priorities, and potentially pursuing bankruptcy proceedings to avoid personal liability. Estate trustees must also consider their options for protecting themselves while fulfilling their legal duties to creditors and beneficiaries.
