Q&As

How should executors check whether an overseas beneficiary is bankrupt? What protection is there for executors when distributing assets to overseas beneficiaries who are bankrupt?

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Published on LexisPSL on 28/09/2016

The following Wills & Probate Q&A provides comprehensive and up to date legal information covering:

  • How should executors check whether an overseas beneficiary is bankrupt? What protection is there for executors when distributing assets to overseas beneficiaries who are bankrupt?

How should executors check whether an overseas beneficiary is bankrupt? What protection is there for executors when distributing assets to overseas beneficiaries who are bankrupt?

When administering the deceased’s estate, the executors or personal representatives (PRs) have a duty to settle any debts, liabilities and administration expenses and subsequently to distribute the legacies and residuary estate in the correct order and form. For information on the considerations for PRs when preparing to distribute the estate, see Practice Note: Payment of legacies.

As you have identified, the PRs should also consider the solvency of beneficiaries of the estate before distributing legacies to them.

Where a bankruptcy order has been made against a beneficiary, the correct recipient will be the trustee in bankruptcy, rather than the beneficiary. This is because, where a trustee in bankruptcy is appointed, all property belonging to the bankrupt automatically vests in the trustee in bankruptcy under section 306 of the Insolvency Act 1986 (IA 1986). The property of the bankrupt is defined very widely in IA 1986, s 436 to include ‘things in action’, which includes the right to receive an inheritance from an estate (Re Bertha Hemming Deceased, Raymond Saul & Co v Holden).

Therefore, if a PR makes a distribution to a bankrupt beneficiary, they may be making the distribution to the wrong person and, if the bankrupt beneficiary puts the assets beyond

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