Final answer:
Insufficient assets in an estate lead to debts, taxes, and expenses being prioritized by law before distribution to inheritors. Legacies and devises are typically reduced or eliminated to settle such obligations, with taxes and debts often having precedence over distributions to beneficiaries.
Step-by-step explanation:
When there are insufficient assets in the testator's estate to pay all debts, taxes, and expenses, the order of abatement typically adheres to certain legal principles, although the specific laws can vary by jurisdiction. Generally, the priorities for payment are established by statute and usually follow this order: expenses of last illness and funeral expenses, administrative expenses, taxes and debts, and then distributions to beneficiaries. When it is necessary to abate legacies and devises, which means to reduce or eliminate them, debts and taxes often have legal precedence. This means these obligations are paid out before any distribution of assets to heirs, legatees (those receiving personal property through a will), or devisees (those receiving real property).
If assets still remain after settling debts and taxes, they are distributed to heirs or beneficiaries. However, if the assets are not sufficient, legacies and devises may be abated. The specific rules for abatement can depend on whether the bequests are specific, demonstrative, or residuary, and whether any assets are protected from creditors by laws such as estate insurance.
It is important for individuals who are dealing with estate matters to consult with a legal professional who can provide guidance according to the relevant laws in their jurisdiction.