Administration of estates (solvent estates - unsecured debts) (Administration of estates)- FS Flashcards
(11 cards)
What does Section 34(3) of the Administration of Estates Act 1925 regulate?
It governs the order in which estate assets must be used to pay unsecured debts and expenses in a solvent estate.
What is the first category of assets to be applied when paying unsecured debts under s.34(3)?
Undisposed-of property — assets not specifically mentioned in the will.
What is the second category of assets applied after undisposed-of property under s.34(3)?
Residuary estate — the portion of the estate remaining after specific gifts and debts.
What is the fourth category of assets used to pay debts under the statutory order in s.34(3)?
Pecuniary legacies — monetary gifts left to specific beneficiaries.
What is the third category of assets to be applied for payment of debts under s.34(3)?
Property specifically charged with the payment of debts by direction in the will.
What is the final category of assets to be used to pay debts if previous categories are insufficient?
Property that is the subject of a specific legacy or devise — e.g., real estate or personal items gifted specifically in the will.
Can a testator vary the order of asset application under Section 34 AEA 1925?
✅ Yes. The testator may expressly state a contrary intention in the will to override the statutory order.
What is the Term: Pecuniary Legacy
A gift of a specific sum of money under a will, which may be abated (reduced) if insufficient funds remain after debts and liabilities are paid.
What happens if a testator states a gift is given “free of tax or debt”?
The asset is exempt from being used to pay debts, overriding the default order under s.34
In what order should executors pay £450,000 in debts from an estate containing:
- £100,000 undisclosed savings
- £250,000 residuary assets
- £100,000 pecuniary legacy
- £750,000 house (specific devise)?
Executors should apply the undisclosed savings first, then residuary estate, then the pecuniary legacy fund — not the house, which is a specific devise.
Do executors need the beneficiary’s consent to sell estate assets to pay liabilities if the assets are not specifically gifted in the will?
No, executors do not need the beneficiary’s consent. They have the authority to sell assets not specifically gifted in the will to discharge estate liabilities, including inheritance tax.
