IHTM12093 - The incidence of debts and legacies: payment of uncharged debts out of the estate
S34 (3) Administration of Estates Act 1925 provides that a
deceased person’s real and personal estate shall ‘be
applicable towards the discharge of the funeral, testamentary and
administration expenses, debts and liabilities payable thereout in
the order mentioned in Part II of the First Schedule’ to the
Act. The schedule is as follows
Order of Application of Assets where the estate is
solvent
- Property of the deceased undisposed of by will, subject to the
retention thereout of a fund sufficient to meet any pecuniary
legacies
- Property of the deceased not specifically devised or bequeathed
but included (either by a specific or general description) in a
residuary gift, subject to the retention out of such property of a
fund sufficient to meet any pecuniary legacies, so far as not
provided for as aforesaid
- Property of the deceased specifically appropriated or devised
or bequeathed (either by a specific or general description) for the
payment of debts
- Property of the deceased charged with, or devised or bequeathed
(either by a specific or general description) subject to a charge
for the payment of debts
- The fund, if any, retained to meet pecuniary legacies
- Property specifically devised or bequeathed, rateably according
to value
- Property appointed by will under a general power, including the
statutory power to dispose of entailed interests, rateably
according to value
- The order of application may be varied by the will of the deceased
As regards number 8 above, this means that the statutory order
will always be subject to a contrary intention being shown. In that
case, the court will require proof that the deceased set aside
particular property for the payment of debts with the intention of
exonerating other property from the burden.
The seven classes of assets given in the schedule above are
not fully comprehensive and other assets are available for the
payment of creditors.
These are
- funds payable to the estate upon the exercise of an option
- property subject to a donatio mortis causa
- property subject to a general power of appointment (IHTM04034) exercisable by deed if it had been exercised
