When an executor realizes the estate lacks the assets to meet estate obligations, including bequests, an abatement process occurs. The abatement process allows for the proportional payment of obligations using limited assets that result in reducing or eliminating bequests to beneficiaries.  

Initially, to determine the need for abatement, the executor will build an administration plan as described in the article The Administration Plan: A Necessity for the Executor. If the plan reveals that the estate lacks the assets to meet estate obligations, then abatement will result. Additionally, if the will excludes abatement instructions, estate law will handle the abatement process. This article will provide an overview of how estate law in Massachusetts handles abatement. 

The Abatement Process for Handling Payment of Debts

In Massachusetts estate law, before initiating the abatement process, the surviving spouse may elect to take a share of the assets. If the surviving spouse takes an elective share, the bequests for beneficiaries would further abate. Regardless, if the estate assets are insufficient to fully cover the expenses and claims on the estate, Massachusetts estate law establishes the following order of payment:

• Costs and expenses of administration;

• Reasonable funeral expenses;

• Debts and taxes with preference under federal law;

• Reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending the decedent;

• Debts and taxes with preference under other laws of this commonwealth;

• Debts due to the division of medical assistance;
• All other claims.

After using all the assets to pay the expenses and claims, all bequests would be eliminated.

The Abatement Process for Handling Bequests

In some estates there may be instances where there are enough assets to pay expenses and claims. However, the remaining assets may be insufficient to honor all bequests. Without any preference between real and personal property, Massachusetts estate law will abate bequests in the following order:

1. Property passing by intestacy;
2. Residuary bequests;
3. General bequests;
4. Specific bequests.

In terms of the order, determining the correct category of a bequest has some considerations. Therefore, the common executor should defer to an attorney to handle the abatement process.

Final Facts

In full disclosure, I am not an attorney. Also, in my estate administration, abatement was never a concern. So, this article is a simple overview of what the abatement process entails. The abatement process is much more complicated than this article reveals. As a result, any common executor facing abatement should defer the matter to an attorney skilled in probate law. 

Furthermore, since some articles in this blog indicated that selling property left in the will may be necessary to cover expenses, this article reveals the process of how that happens. The executor doesn’t get to pick which beneficiary loses a bequest. The decedent or probate court makes that decision through the will or legal statute.

Also, for the most part, the abatement process protects the executor from legal action or contests from beneficiaries concerning abatement. If a beneficiary or creditor doesn’t agree with abatement and files a lawsuit, they will certainly lose. The same happens if a beneficiary contests the will, that beneficiary will lose. Of course, there are exceptions to every rule and that applies to estate law as well. However, unless there are extraordinary circumstances, the abatement process will protect executors.

Finally, although abatement could result from unforeseen expenses, proper estate planning will help to avoid abatement. So, estate planners should plan well and keep the estate plan updated to account for changed circumstances.

Was this article helpful? Did this overview help you understand how abatement generally works? Do you understand why common executors should defer to an attorney when addressing abatement? Share your thoughts and questions in the comment area below. 

References

Article III Probate of Wills and Administration – Article III establishes estate law concerning the probate of wills and administration in Massachusetts. The subsections provided below relate to the material used for the above article. 

Section 3-805[Classification of Claims.] PG 58-59. Establishes the order of payment for expenses and claims in Massachusetts.

Section 3-807[Payment of Claims.] PG 59. Establishes the rule that executors must present estate as insolvent to probate court if estate is too small to pay claims. Also establishes protection for the executor while estate is insolvent. 

Section 3-902[Distribution; Order in Which Assets Appropriated; Abatement] PG 65. Establishes the order of abatement if bequests cannot be met.