Chapter 14: Collecting and realising assets

Question 1

Do causes of action vested in the deceased or against the deceased survive for the benefit or detriment of the estate?

Answer 1

Yes

Question 2

If PRs recover damages on behalf of dependants for death by wrongful act, will damages form part of the estate?

Answer 2

Any damages recovered do not form part of the estate

Question 3

Do PRs have the power to deal with assets passing outside of the will or intestacy?

Answer 3

No

Question 4

When PRs are dealing with insitutions, can they provide photocopies of the grant as opposed to the official office copy of the grant?

Answer 4

No, photocopies are not acceptable evidence

Question 5

Can PRs sell property specifically gifted in the will?

Answer 5

PRs should not sell any property specifically gifted in the will unless other assets have been exhausted

Question 6

Can a beneficiary express a wish to receive a particular asset to satisfy a pecuniary legacy as their share of the residue?

Answer 6

Yes

Question 7

If capital losses are made, can these be offset against capital gains made by PRs?

Answer 7

Yes

Question 8

If an asset is vested in a beneficiary, at what value will it be acquired?

Answer 8

It will be acquired at the value on the date of death

Question 9

When considering whether an estate is solvent, is it relevant whether legacies under the will can be satisfied in full?

Answer 9

No, a solvent estate is only concerned with whether funeral, testamentary, administrative expenses and debts can be paid in full

Question 10

In a solvent estate, how should secured debts be dealt with?

Answer 10

A secured debt should be discharged from the property against which it is secured

Subject to any contrary intentions in the will

Question 11

In a solvent estate, what order should unsecured debts be paid?

Answer 11

1. Property undisposed of by the will
2. Residue

Question 12

In what order should debts be repaid if the will states that debts cannot be paid from the residue?

Answer 12

1. Property specifically given for payment of debts
2. Property specifically charged with the payment of the debts
3. Pecuniary legacies (abate proportionately)
4. Property specifically devised or bequeathed

Question 13

What is the doctrine of marshalling?

Answer 13

• Applies when property is taken in the wrong order to pay off debt
• Disappointed beneficiary is entitled to compensation from the residue

Question 14

What must happen if a will is “free of mortgage”?

Answer 14

The mortgage must be paid out of the residue to the extent of the residue

Question 15

What is an insolvent estate?

Answer 15

An estate which has insufficient assets to pay expenses, debts and liabilities in full

Question 16

What do beneficiaries receive in an insolvent estate?

Answer 16

Nothing

Question 17

In an insolvent estate, what order must unsecured creditors be paid in?

Answer 17

1. Reasonable funeral and administration expenses
2. Preferred debts (wages and salaries for employees in four months up to death - up to £800 each)
3. Ordinary debts
4. Interest on preferred and ordinary debts
5. Deferred debts - loans from deceased’s spouse

Question 18

In an insolvent estate, how will creditors from each category rank?

Answer 18

Equally and they abate proporionately

Question 19

What will happen if a PR pays a category of debts knowing that there are higher ranking debts?

Answer 19

The PR will be personally liable if there are insufficient assets to pay the higher ranking debt

Question 20

Will a PR be liable if they pay an inferior debt without notice of a debt in a higher category?

Answer 20

No, provided that they did not do so with undue haste

Question 21

Will a PR be responsible if payment to a creditor in one class was made before full payment to the others and it later turns out that the estate is insolvent?

Answer 21

The PRs will be protected if acting in good faith and they had no reason to believe that the estate was insolvent