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Sometimes probate estates are insolvent which means the claims against the estate are greater than the assets in the estate. In this situation T.C.A. § 30-5-102 requires the personal representative to file a notice of insolvency with the clerk. A copy of that notice must be sent to all the creditors who have filed a claim.
Under T.C.A. § 30-5-103 the personal representative is then responsible to provide a proposed plan of distribution in accordance with T.C.A. §30-2-317. T.C.A. §30-2-317 is the statute that governs the payment priority of all claims made against an estate. T.C.A. § 30-5-103 provides as follows:
(a) The notice of insolvency shall contain an accounting of assets that have come into the hands of the personal representative and a proposed plan of distribution in accordance with § 30-2-317.
(b) The notice shall bear, in a conspicuous manner, the following language: “Objections to this proposed plan of distribution must be filed with the clerk within thirty (30) days from the date of receipt of this notice.”
(c) If no objections are filed within the thirty-day waiting period, the personal representative may execute the proposed plan of distribution and close the estate, relieving the personal representative of any further liability to the estate.
If there are any objections to the proposed plan of distribution than a hearing can be held pursuant to T.C.A. § 30-5-104 to determine if the proposed plan is appropriate. After all of the objections to the plan of distribution are resolved, then distributions can be made and the estate can be closed under T.C.A. § 30-5-105.
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