Payment of debts—solvent estate
Payment of debts—solvent estate

The following Wills & Probate practice note provides comprehensive and up to date legal information covering:

  • Payment of debts—solvent estate
  • Meaning of solvent
  • Funeral, testamentary and administrative expenses
  • Time for payment
  • Secured debts—general rule
  • Scope of the general rule
  • Rights of creditors
  • Exceptions to the general rule
  • Contrary intention—Secured debts
  • Unsecured debts—the statutory order
  • More...

Payment of debts—solvent estate

Meaning of solvent

The rules applicable to the payment of the deceased’s debts and funeral and testamentary expenses depend on whether the estate is solvent or insolvent. A solvent estate is one where the assets are sufficient to pay the funeral, testamentary and administration expenses, debts and liabilities in full. It is irrelevant whether or not legacies can be paid in full in terms of deciding whether or not an estate is solvent.

If there is doubt as to whether an estate will turn out to be solvent or not, practitioners should consider following the statutory order for the payment of debts in an insolvent estate as set out in Schedule 6 to the Insolvency Act 1986, which provides an order of priority for the settlement of the deceased’s debts and funeral and testamentary expenses.

For information on the statutory order for payment of debts in an insolvent estate, see Practice Note: Payment of debts—insolvent estate.

The 'rules' for determining where debts and liabilities fall in a solvent estate are found in section 34 of the Administration of Estates Act 1925 (AEA 1925).

AEA 1925, Sch 1 Pt II sets out the order that the personal representatives (PRs) must follow when utilising the deceased's assets to pay the expenses, debts and liabilities. This is relevant where it is expected that there are insufficient assets in the

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