Paying debts, funeral expenses and pecuniary legacies
pg. 432
Funeral and testamentary expenses and debts
s34 AEA: funeral and testamentary expenses (e.g. cost of obtaining the
grant/collecting and preserving assets) taken from residuary estate before using
property given to specific legatees.
Insolvent estate: insufficient assets to discharge in full funeral, testamentary and
administration expenses, debts and liabilities. Creditors and beneficiaries will not be
paid. PRs should administer estate as insolvent if unsure – or breach of duty.
Specific legacies
If specific legacy is property, once PRs are satisfied the property not required for
expenses/debts, should transfer to beneficiary.
income earnt e.g. from shares, will belong to the beneficiary, but must wait until he
PRs transfer the shares over. Beneficiary liable to pay any interest due from date of
death.
Any costs of transfer should be reimbursed from the beneficiary to the PRs.
Specific legacies – provision by will
Stated in will.
Specific legacies – no provision by will
Where no provision in will, usually paid from residuary personality.
General rule is that pecuniary legacy payable at the end of the ‘executor’s year’ –
one year after testators’ death.
S44 provides that PRs are not bound to distribute the estate to the beneficiaries
before the expiration of one year from death.
o Entitled to interest if longer than one year.
pg. 432
Funeral and testamentary expenses and debts
s34 AEA: funeral and testamentary expenses (e.g. cost of obtaining the
grant/collecting and preserving assets) taken from residuary estate before using
property given to specific legatees.
Insolvent estate: insufficient assets to discharge in full funeral, testamentary and
administration expenses, debts and liabilities. Creditors and beneficiaries will not be
paid. PRs should administer estate as insolvent if unsure – or breach of duty.
Specific legacies
If specific legacy is property, once PRs are satisfied the property not required for
expenses/debts, should transfer to beneficiary.
income earnt e.g. from shares, will belong to the beneficiary, but must wait until he
PRs transfer the shares over. Beneficiary liable to pay any interest due from date of
death.
Any costs of transfer should be reimbursed from the beneficiary to the PRs.
Specific legacies – provision by will
Stated in will.
Specific legacies – no provision by will
Where no provision in will, usually paid from residuary personality.
General rule is that pecuniary legacy payable at the end of the ‘executor’s year’ –
one year after testators’ death.
S44 provides that PRs are not bound to distribute the estate to the beneficiaries
before the expiration of one year from death.
o Entitled to interest if longer than one year.
