The following Wills & Probate guidance note provides comprehensive and up to date legal information covering:
Personal representatives (PRs) have a duty to pay the deceased's debts with due diligence, having regard to the assets in their hands that are properly applicable for that purpose and all the circumstances of the case.
Due diligence will normally require payment to be made before the end of the 'executor's year'. The PRs must justify any delay.
PRs remain liable to the creditors and beneficiaries of the estate for any unpaid debts or liabilities.
PRs may protect themselves from unknown debts by:
placing the statutory advertisement for claims under section 27 of the Trustee Act 1925 (TA 1925) or
seeking the leave of the court to distribute the estate on the ground that all the deceased's debts and liabilities have been ascertained
If PRs discharge a debt when they have reason to believe that the estate is solvent but it is in fact insolvent, they are afforded some statutory protection by section 10 of the Administration of Estates Act 1971 (AEA 1971).
The PRs may have to decide what to do about a potential claim against the estate that has not yet been prosecuted and is not statute-barred. They have a number of choices:
retain funds and wait for the debt to become statute-barred
exercise their power of compromise
distribute the estate
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