ESTATE PLANNING PROBATE NEWSLETTER


Bankruptcy Issues Involving Conservators & Guardians

You have been named executor of your deceased friend's will. You discover that his/her liabilities exceed the amount of assets in the estate. Can you, as executor of the estate, file for bankruptcy on behalf of the estate? 

Sadly, the answer is no.  In order to file for bankruptcy, the petitioner must qualify as a "person." Since an estate is not a person, bankruptcy relief is not available.

Incapacitated Persons

However, a conservator or guardian of an incapacitated person may have the ability to file for bankruptcy on his/her behalf. Some states allow the conservator or guardian to do so without prior court approval but normal bankruptcy rules apply for discharging the debts.

Others not appointed as conservators or guardians may also file for bankruptcy on behalf of an incapacitated individual. Courts have even allowed a friend or guardian ad litem to initiate the bankruptcy action for an incompetent person or minor.

Restrictions Apply

If a conservator or guardian plans to file personal bankruptcy, under the law of many states, insolvency or bankruptcy are grounds for removal from the position.

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The information presented in this site should not be construed to be formal
legal advice nor the formation of a lawyer/client relationship.