Q&As

Where a beneficiary of an estate also owes debts to the estate, can those debts be offset against the legacy? If the beneficiary disputes the debt are the personal representatives obliged to pay out the legacy?

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Published on LexisPSL on 16/04/2016

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

  • Where a beneficiary of an estate also owes debts to the estate, can those debts be offset against the legacy? If the beneficiary disputes the debt are the personal representatives obliged to pay out the legacy?
  • Effect of debtor’s/legatee’s bankruptcy
  • Effect of disputed debt—the nature of debts that must be brought into account

Where a beneficiary of an estate also owes debts to the estate, can those debts be offset against the legacy? If the beneficiary disputes the debt are the personal representatives obliged to pay out the legacy?

The Practice Note: Payment of legacies states that where a legatee of either a general legacy or a share in residue is a debtor to the estate, the debt must be brought into account. This principle was established in Cherry v Boultbee (1839) 4 My & Cr 442 (not reported by LexisNexis®) and further affirmed in Re Akerman, Akerman v Akerman.

The general principle is explained in Williams on Wills as follows:

'A legatee is not entitled to receive out of the testator's estate any benefit without bringing into account money owing by him to the testator. This is in the nature of a right of set-off, and, as prima facie only money can be set off against money, the principle applies only to money legacies, ie general legacies and not to specific legacies, unless the latter happen to be specific legacies of a sum of money. The debt to be brought into account must be one due and payable at the time the legacy is payable and must be owing to the testator in his own right and not in a fiduciary or representative capacity. There are thus two questions

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