13.6: Administration of estates Flashcards
What is the primary duty of a personal representative?
To collect the monies and assets of the deceased, administer the estate, and distribute the residue according to the will or intestacy laws.
What is meant by “realising assets” in estate administration?
It means converting assets into cash when necessary to pay debts, legacies, or distribute the estate.
What standard of care must personal representatives uphold?
They must act with reasonable care and skill, considering any professional expertise they have (e.g., as an accountant or solicitor).
Can personal representatives be sued?
Yes, they may be sued by beneficiaries or creditors for misappropriating assets, negligence, or poor administration.
Jointly and severely liable.
When can a personal representative be relieved of liability?
If the court is satisfied they acted honestly, reasonably, and ought fairly to be excused for the breach.
What powers do personal representatives have?
They can sell, mortgage, or lease assets, appropriate assets, and appoint trustees for minor beneficiaries.
What is “appropriation” in estate administration?
It is the process of satisfying a pecuniary legacy or share of the estate by transferring an asset instead of cash.
What happens when a beneficiary is under 18?
They cannot legally receive money or assets directly, so trustees must be appointed to manage their inheritance.
What does Section 31 of the Trustee Act 1925 allow?
Trustees can apply income from a minor’s inheritance for their maintenance, education, or benefit.
What protection does Section 27 of the Trustee Act 1925 provide?
Personal representatives can advertise for creditors and unknown beneficiaries to avoid future claims against the estate. They have two months to come forward and after this they are protected. Law Gazette.
What can personal representatives do if they cannot locate a beneficiary?
- They can pay the money into court for that beneficiary and distribute the rest according to the or
- take out insurance against a future claim.
- indemnity
- Benjamin order
This will protect them from being liable.
What is a Benjamin Order?
A court order allowing personal representatives to distribute an estate based on an assumption about a missing beneficiary.
Why should personal representatives wait 6 months before distributing an estate?
To allow time for any claims against the estate for reasonable financial provision.
What determines which estate assets are sold first to pay debts?
A statutory order of payment prioritizes different types of assets, unless the will states otherwise.
What happens if an estate is insolvent?
Beneficiaries receive nothing, and creditors are paid in a strict legal order.
What is the difference between disclaiming and varying an inheritance?
Disclaiming means refusing an inheritance and the beneficiary will have no say over where the inheritance goes, whereas varying means redirecting it to someone else and they have a say over where the assets go.
How should personal representatives handle estate accounts?
They should prepare detailed records of assets, liabilities, inheritance tax paid, and distributions to beneficiaries.
How can a personal representative protect themselves from liability from any potential claims from UNKNOWN BENEFICARIES?
by complying with s 27 of the Trustees Act 1925, they can place adverts in the London Gazette, local newspaper and request any person with a claim to contact them within 2 months. This offers protection from any potential claims.
Personal representatives are personally liable to any unpaid beneficiary or creditor unless they comply with
s27 of the Trustee Act 1925
What is the order of priority following a death?
The funeral and administration expenses have priority, followed by the unsecured debts, which rank equally and abate proportionally and have priority over the amount owed to the spouse.
With an insolvent estate, what is the order that personal representatives must pay the creditors?
Funeral and administration expenses, preferred debts, ordinary debts, interest on preferred and ordinary debts, and deferred debts.
Ranking of debts is v important
Section 27 Trustee Act 1925
Protects personal representatives from UNKNOWN Beneficaries - not know
Who can make a claim within 6 months under the Inheritance (Provision for Family and Dependants) Act 1975?
🔹 Spouse or civil partner – entitled to reasonable financial provision.
🔹 Former spouse/civil partner – only if not remarried.
🔹 Cohabiting partner – must have lived together for 2 years before death.
🔹 Child of the deceased – biological or adopted (no need for financial dependence).
🔹 Person treated as a child of the family – e.g., stepchild, foster child (must prove financial dependence).
🔹 Anyone financially maintained by the deceased – must show regular financial support.
Why Should an Executor Wait 6 Months Before Distributing the Estate?
Best practice is to wait at least 6 months after the grant of probate before distributing the estate – otherwise, the executor risks personal liability.
avoid any claims from missing beneficiaries and unknown claims
