Insolvent estates

With the current economic conditions and taking into account that the majority of people still do not make a will, it is perhaps surprising that the issue of what happens to an insolvent estate is not more widely discussed or commented upon, especially as regards how administrators or executors should deal with an insolvent estate and what are the risks, if any, for administrators or executors ?

Below are some quick tips on dealing with an insolvent estate :-

• An executor can refuse his or her appointment but not after starting in the role in any substantive way.
• When liabilities exceed  assets, the duty of personal representatives is to creditors not beneficiaries.
•  Debts must be paid before any payments are made to beneficiaries. If this executor(s) fail to do this, he/she/they can be personally liable.
• A possible way of dealing with an insolvency of this type is for executors to apply for an Insolvency Administration Order which will then result in the estate administration legal responsibility transferring  to the appointed insolvency practitioner.