What happens with an insolvent estate when liabilities of the deceased exceed the available assets?
If you are a beneficiary under a Will where the liabilities of the deceased are more than the assets of the deceased then it is important to be aware of the way in which Insolvent Deceased Estates are dealt with by law.
An Insolvent Deceased Estate will be administered in accordance with rules set out in the Probate and Administration Act of New South Wales.
The purpose of the rules governing Insolvent Estates is to govern the order of payment for creditors of the deceased estate. Under these rules the payment of any funeral, testamentary and administrative expenses of the Deceased Estate are paid first. These priority payments cover the costs of the administrator of the Estate of the deceased person.
If there are any assets available after payment of these expenses then the remainder of the liabilities of the Estate are dealt with in accordance with the rules of priority used in the Bankruptcy Act.
However, certain assets of the deceased are not included in the Insolvent Estate but rather, pass straight to the beneficiaries, including:
- Life insurance policies of the deceased unless the deceased had entered into a contract expressly requiring the monies under the policy to be used to pay their debts; and
- Superannuation benefits of the deceased.
If you are a beneficiary under an Insolvent Estate you need to seek expert legal advice from a Wills and Estates Lawyer on the effect of the insolvency on your inheritance and ways in which you can safeguard this inheritance. At Heckenberg Lawyers we are involved in every facet of the law governing Wills and Estates and have assisted countless beneficiaries dealing with the disappointment of discovering that their inheritance under a Will may not materialise due to the insolvency of the Estate.
If you are a beneficiary in this position it is in your best interests to obtain independent legal advice on your own behalf to ensure that the information you are being provided with is accurate and to ensure that your interests in the Insolvent Estate are protected. Our expert Wills and Estate Lawyers will explain to you the effect of the Insolvent Estate on your inheritance as well as undertaking and reviewing any material provided by the administrator of the Estate and advising you on your best course of action.
At Heckenberg Lawyers we don’t take our clients’ confidence for granted: we work hard to earn it by providing an efficient, cost effective service which puts your interests first and doesn’t cut corners. We take pride in achieving repeat custom and winning clients by word of mouth recommendation.
If you need advice from an Estate Planning Lawyer, please call 02 9221 2779 or email firstname.lastname@example.org to arrange an initial consultation with principal lawyer Graeme Heckenberg at our centrally located Macquarie Street Sydney office.
See our Will Dispute Lawyer & Contesting Wills page for more information on the Wills & Estates services we provide or contact us for advice specific to your situation.