Illiquid Estates

The Commissioner of Accounts will often recommend that the executor retain to protect the executor from personal liability.

The executor should not make any distribution or payment if the executor is not completely certain that the estate is solvent. If the estate is insolvent, the executor will be personally liable for any payment not following the order of priority. In fact, the executor cannot be compelled to make any distribution for the first six month of his/her
appointment.

In other states, like the District of Columbia and the State of Maryland, the executor is required to publish notices of his/her appointment. From the date of the publication of the notice, a statute of limitation runs for the creditors to file a claim. This statute of limitation does not exist in the Commonwealth of Virginia. 




Hearing for Proof of Debts and Demands to Protect Executor From Personal Liabity
In order to have proper protection from unknown creditors or others who may have a claim against the estate, the executor may want to request the Commissioner of Accounts to hold a Hearing for Proof of Debts and Demands



Once there is a clear list of claims, the executor can proceed to obtain an Order of Distribution from the Court. The executor will start the procedure by making a written request to the Commissioner of Accounts to schedule a Hearing for Proof of Debts and Demands. The fee to be paid will include the cost of the newspaper publication. Then, the executor will give written notice to creditors and claimants and provide the Commissioner of Accounts with a certification form.


The executor does not need to be at the hearing unless the executor anticipates that a person will present a disputed claim. If a creditor or claimant of a disputed claim appear, the commissioner will contact you and continue the hearing to a mutually agree upon time for all concerned parties in order to resolve the dispute.

Priority When the assets of the decedent are not sufficient for the satisfaction of all demands, Virginia Code Section 64.1-157 sets the following order of payment: 
  • Cost and expenses of administration;
  • Family Allowance, Exempt Property, and Homestead Allowance;
  •  Funeral expenses not to exceed $3,500;
  •  Debts and taxes with preference under federal law;
  •  Medical and hospital expenses of the last illness of the decedent, includingcompensation of persons attending the decedent not to exceed $400 for each hospital and nursing home and $150 for each person furnishing services or goods;
  • Debts and taxes due to the Commonwealth;
  • Debts dues as trustee for persons under disabilities;
  • Debts and taxes due localities and municipal corporations of the Commonwealth;
  •  All other claims.
Once the interim account has been approved by the Commissioner of Accounts and filed with the Court, the executor may begin show cause proceedings. The Executor will prepare an Order to Show Cause and file it with the Clerk of the Circuit Court. Publication of the Order in a local newspaper is arranged by the Clerk. If no exceptions are presented in Court on the return day, the Judge will sign the Order of Distribution. The executor needs to prepare the Order and present it to the Court on the return date. Finally, the executor can proceed to close the estate and file the final account with the Commissioner of Accounts.