Deceased estates: protecting against liability

Personal Representatives (PRs) owe duties to both creditors and beneficiaries of an estate – in fact, their duties owed to the creditors trump those owed to the beneficiaries, as creditors’ claims must be satisfied first, with beneficiaries entitled only to what is left.

PRs will be liable for a ‘devastavit’ if they mismanage ‘the estate and effects of the deceased, in squandering and misapplying the assets contrary to the duties imposed on them, for which executors or administrators must answer out of their own pockets’ (Re Stevens [1898] 1 Ch 162).

Thus, if PRs pay the beneficiaries before they have paid all of the creditors, they will be liable to the creditors from their own pocket – even if the creditors were unknown to them.

This problem has been exacerbated by the rise of online banking and investments: the ‘paperless’ age. It is quite possible that the deceased will have liabilities for which the PR will find no evidence, resulting in a real risk that PRs will pay out the estate to the beneficiaries in the belief that all creditors have been paid, only for others to emerge, giving rise to personal liability of the PR.

Fortunately, protection from such risk may be gained from advertising for claims in The Gazette (and local newspapers) under s.27 of the Trustee Act 1925 and s.28 of the Trustee Act (Northern Ireland) 1958. You can place both the notice and the advertisement in a local newspaper via The Gazette.

Find out more, including answers to frequently asked questions, by downloading the PDF leaflet.