Insolvent Estates

What happens with an insolvent estate when the value of the liabilities exceed the value of the assets?

If you are a beneficiary under a Will where the liabilities of the deceased are more than the assets of the deceased then it is important to be aware of the way in which Insolvent Deceased Estates are dealt with by law.

An Insolvent Deceased Estate will be administered in accordance with rules set out in the Probate and Administration Act of New South Wales.

The purpose of the rules governing Insolvent Estates is to govern the order of payment for creditors of the deceased estate. Under these rules the payment of any funeral, testamentary and administrative expenses of the Deceased Estate are paid first. These priority payments cover the costs of the administrator of the Estate of the deceased person.

If there are any assets available after payment of these expenses then the remainder of the liabilities of the Estate are dealt with in accordance with the rules of priority used in the Bankruptcy Act.

However, certain assets of the deceased are not included in the Insolvent Estate but rather, pass straight to the beneficiaries, including:

  • Life insurance policies of the deceased unless the deceased had entered into a contract expressly requiring the monies under the policy to be used to pay their debts.
  • Superannuation benefits of the deceased.

If you are a beneficiary under an Insolvent Estate you need to seek expert legal advice from a Wills and Estates Lawyer on the effect of the insolvency on your inheritance and ways in which you can safeguard this inheritance. At Heckenberg Lawyers we are involved in every facet of the law governing Wills and Estates and have assisted countless beneficiaries dealing with the disappointment of discovering that their inheritance under a Will may not materialise due to the insolvency of the Estate.

If you are a beneficiary in this position it is in your best interests to obtain independent legal advice on your own behalf to ensure that the information you are being provided with is accurate and to ensure that your interests in the Insolvent Estate are protected. Our expert Wills and Estate Lawyers will explain to you the effect of the Insolvent Estate on your inheritance as well as undertaking and reviewing any material provided by the administrator of the Estate and advising you on your best course of action.

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Samuel Burns
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As the executor of an estate, I engaged Graeme and his team to handle a family provision claim and probate matter. I found Graeme to be professional and knowledgeable. Throughout the entire process, Graeme treated all parties involved with respect. He was always willing to take my concerns onboard and never pushy. I find legal matters highly stressful. Having Graeme and his team guide the process helped ease the stress and achieve a fair resolution for all involved. Highly recommended.
Sonja Psaroudis
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If you need legal representation in a matter to do with Wills & Estate law I highly recommend Graeme, Blaise and the whole team at Heckenberg. Their knowledge and expertise in this area of the law was a huge comfort at a very difficult time, saving all parties involved time and money in the long run. Thanks again!
Donna Hodges
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Blaise was extremely professional in assisting with all matters to do with my fathers estate and probate. She made an extremely complex process very easy to understand and instilled great confidence at a difficult personal time for our family.
Kim Pink
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I found Heckenberg Lawyers to be very professional and knowledgeable. Graeme took the time and explained the entire process to me. He was never pushy nor was he just after "his cut" as so many other practices are. He was at all times looking out for the best interest of the estate and not wanting it to be eaten. I found his staff to be extremely thorough and attentive. I would have no hesitations to recommend this practice if you want the best outcome possible.
Jane Araneda
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Thanks to Graeme, Blaise and their team at Heckenberg Lawyers for helping us finalise our matter in a timely manner. They were always very helpful and professional. They took care of everything very well, which meant that there was no added stress on me and my family.
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