What happens if the estate doesn’t have enough assets to cover debts and gifts?

If an estate’s debts exceed its assets, it is considered insolvent. In this case, the executor must prioritise paying off debts according to legal requirements before any distributions to beneficiaries. Some specific bequests may be reduced or omitted if there are not enough remaining assets to fulfil them.

Executors are advised to work closely with wills and estates lawyers in managing insolvent estates to ensure compliance with NSW laws.