Collecting and Realising Assets Flashcards

1
Q

Who must PRs pay before distributing the estate to beneficiaries?

A

Estate creditors

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2
Q

Should PRs sell any property specifically gifted in a will to pay debts?

A

No - unless other assets have been exhausted

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3
Q

What is a solvent estate?

A

One where the reasonable funeral, testamentary, and administration expenses, debts, and other liabilities can be paid in full

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4
Q

For solvent estates, a secured debt should be discharged from what?

(subject to contrary intention shown in the will)

A

The property against which it is secured

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5
Q

For solvent estates, Unsecured creditors should be paid in which order of estate assets (2)?

A
  1. Property undisposed of by the will
  2. Residue
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6
Q

For solvent estates, If the will provides debts shall not be paid from residue, they will instead be paid from which 3 sources in order?

A
  1. Property the will provides/is charged is to be used for debts
  2. Pecuniary legacies
  3. Property specifically devised or bequeathed
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7
Q

What is an insolvent estate?

A

One that doesn’t have sufficient funds to pay reasonable funeral, testamentary, and administration expenses, debts, and other liabilities in full

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8
Q

In what order of the two types of debt should be paid out of an insolvent estate?

A
  1. Secured debts
  2. Unsecured debts
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9
Q

In what order should unsecured debts be paid out of insolvent estate (5 categories)?

(clue: F.P.O.I.D)

A
  1. Funeral and admin. expenses
  2. Preferred debts
  3. Ordinary debts
  4. Interest on preferred and ordinary debts
  5. Deferred debts
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10
Q

What are preferred debts?

A

Wages and salaries of D’s employees in the 4 months prior to death

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11
Q

What is the maximum amount that can be claimed for each employee of a preferred debt?

A

£800

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12
Q

What 2 types of funds can ordinary debts apply to?

A
  1. Owed to HMRC
  2. Balance of preferred debts
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13
Q

Deferred debts include loans from who?

A

The deceased’s spouse

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14
Q

Unsecured detbs are paid with each creditor within the same ____ ranking ________, so if money runs out in it, their payment ______ (reduces) _______________

A

rank, equally, abates proportionately

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15
Q

What happens if a PR pays a category of debt knowing there are higher ranking debts and there’s insufficient assets to pay the higher ranking debt?

A

The PR is personally liabe

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