Being appointed an executor or trustee in a will may seem an honour. After all, you’re being asked to stand In the willmaker’s shoes and dispose of their assets when he or she is unable to do so themselves. And, though it may be considered the ultimate sign of trust, it also comes with a great deal of responsibility – both moral and legal, so it’s best to know your obligations before agreeing to the task.

Legal actions after death and insolvent estates

Last updated

1 July 2022

Survival of legal actions of deceased

Legal actions by and against the deceased (with some exceptions such as for payments of maintenance to ex-wife and children, and obligations that can only be carried out personally by the deceased) continue after the death of the deceased (s 29 Administration and Probate Act 1958 (Vic) (‘A&P Act’)).

Insolvent estates

If the deceased had more debts than assets it is necessary to deal with the estate in a different way from that which operates where the deceased died financially solvent. Section 39 of the A&P Act sets out which assets of an estate must be used first in payment of insolvent estate debts.

This is particularly so when the deceased has considerable debts but also has property out of which those debts could be paid. In these circumstances the estate is made insolvent.

If the estate is administered by a trustee in bankruptcy, it is administered in accordance with the bankruptcy rules under the Bankruptcy Act 1966 (Cth) and the executor or person granted letters of administration does not take part in the administration of the estate.

However, life policies of the deceased are exempted from the bankruptcy (ss 204, 205 Life Insurance Act 1995 (Cth)) as are superannuation benefits (s 249 Bankruptcy Act 1966 (Cth)). Section 39A of the A&P Act sets out in what order assets of a solvent estate must be applied to meet solvent estate debts.

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