An executor or administrator of an Estate (known as the Legal Personal Representative) has a duty to administer the Estate according to the Will (if one exists) and the law.
It is important to be aware, if you undertake this role, that issues can arise if the Estate is insolvent, that is, if there are insufficient funds to pay the Estate’s debts, or if the deceased was the sole director and/or shareholder of an insolvent company.
A Legal Personal Representative who finds themselves in this situation should seek legal and insolvency advice as soon as they become aware of any issues.
If a Legal Personal Representative suspects insolvency, they should consider appointing a trustee in bankruptcy (trustee) to the deceased estate and, if applicable, a liquidator of the company. Otherwise, they may become personally liable for the debts of the Estate or the liabilities of the company.
Generally speaking, in such circumstances, a Legal Personal Representative can, and should, apply to the Court for the appointment of a trustee. Once a trustee is appointed by the Court, the Estate property will be administered by the Trustee for the benefit of the creditors of the Estate.
If it is a company that is insolvent, then the Legal Personal Representative can, and should, appoint a liquidator over the company who will wind up the business and distribute its assets for the benefit of the creditors in a specific order of priority.
As a Legal Personal Representative, you need to consider, and seek advice, if there is a concurrent bankrupt estate and insolvent company. It may be that the trustee’s and liquidator’s roles give rise to irreconcilable conflict, and often the trustee and liquidator will be separate and unrelated insolvency professionals.
Undertaking the role of Legal Personal Representative should be commenced cautiously and if any issue should arise, or there is a suspicion that an issue may arise, ensure you seek advice without delay from the relevant professionals.
At Hillhouse Legal Partners, we have decades of experience in dealing with a variety of estate issues that a Legal Personal Representative may encounter. We are more than happy to discuss any issue that may arise when the crucial role of Legal Personal Representative is undertaken.
Send us an email or call 07 3220 1144 to discuss your personal circumstances.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.