Traditionally, wills were the primary vehicle under which wealth was transferred to heirs. A will generally contains an express declaration that the executor satisfy the testator's debts. Very generally, the executor or administrator is not merely the representative of the decedent's estate, but also a representative of the rights of the decedent's creditors. It is clear that the decedent's probate assets (assets controlled by the decedent's will or by intestacy) must be used to pay the decedent's debts. But there is less clarity about the responsibilities of a personal representative with respect to the decedent's non-probate property assets, i.e., property transfers at death not controlled by a decedent's will or by intestacy, to the extent, if any, the same may be used to satisfy those same debts.
There has been a substantial increase in the use of non-probate transfers. The cost and time involved in probate administration and privacy concerns have prompted many individuals to transfer their property via testamentary substitutes. In particular, transfers may occur by beneficiary designations through vehicles such as life insurance, retirement plans, and transfer on death accounts. These are non-probate transfers unless the designated beneficiary is the decedent’s estate. Such transfers mean that an individual, who at his death has assets with a date of death value substantially in excess of his debts, may leave an insolvent probate estate. However, as Surrogate Preminger noted, "[t]he proliferation of testamentary substitutes…has left the law in a state of confusion over the rights of creditors to other assets that do not pass under the will or as part of intestate administration."
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