Executors Can Be Held Responsible For Unpaid Debts Connected to a Deceased Estate
March 7, 2019 1:07 pm
Two simple steps to protect you from claims –
Executors and Administrators can be held personally responsible for unpaid debts which emerge after an estate has been distributed. Claims from creditors can be payable for up to twelve years after someone’s death, placing executors and administrators in a vulnerable position.
In an age when many people deal with a high
proportion of financial arrangements online, it can be really difficult to
identify creditors and outstanding debts on a deceased estate but there are a
couple of simple steps lay executors can take to protect themselves against
such claims.
Step One – Deceased Estate Notices
The first is to place two Deceased Estate Notices,
one in the Gazette (an
official journal of record of the British government), and another in a
newspaper local to the deceased person.
Deceased Estate Notices are not a legal
requirement in the UK but the Trustee Act 1925 stipulates
that a statutory advertisement for a deceased estate offers executors
protection from creditors and any unidentified beneficiaries, because the
executor or administrator has demonstrated due diligence in their effort to
identify them. Placing these notices will limit liability significantly
– solicitors acting as executors will do so as a matter of course, but
lay executors are not necessarily aware of their value.
The cost of placing a
notice in the London Gazette (the relevant Gazette for England and Wales)
can be reimbursed from the estate as part of the executor’s reasonable
expenses, but while the cost is relatively small they offer executors valuable
protection. An executor or administrator must present either a copy of
the death certificate, grant of probate or letter of administration in order to
advertise but once the deceased estate notice has been
placed creditors or potential beneficiaries can only make claims for a limited
time – just two months and a day as opposed to the 12 year window – after
this the executor will not be held liable for claims from debtors or
beneficiaries.
Step Two – Indemnity Insurance
A solicitor acting as an executor is protected
against potential legal and financial claims by professional indemnity
insurance, which offers cover for claims and legal defence costs, but very few
lay executors think about taking out insurance although they are equally
vulnerable.
As with Deceased Estate Notices there
is no legal requirement to take out insurance but this type of cover can offer
valuable reassurance and premium payments can also be reimbursed from the
estate as part of the executor’s reasonable expenses. Executors
policies usually cover the period it takes to distribute and manage an estate,
in essence the time during which you are most vulnerable to claims – for
example at Executors Insurance indemnity policies last for 18 months and cover
up to four executors. Most indemnity policies can be renewed if the estate
takes longer than you anticipate. If you have finished dealing with the estate
but are concerned that later claims may arise you should be able to extend your
policy for 12 months at time.
More information on Deceased Estate
Notices is available on the Gazette
website
