S.27 Of The Trustee Act – Removing Liability Of Personal Representatives When Distributing A Deceased’s Estate

A deceased’s liabilities are not always made clear to the personal representatives on their death and some digging will be required by the personal representatives to locate a deceased’s creditors. Most liabilities become evident on inspection of the deceased’s bank statements and any paperwork they retained.

This becomes more difficult when the deceased used a number of banks and kept minimal paperwork. Personal representatives will be expected to make reasonable enquiries which would include enquiries of banks they are aware the deceased was known to use and other financial providers which appear appropriate, based on the information to hand.

Personal representatives should also avoid making an early distribution to allow sufficient time for creditors to come forward. If personal representatives fail to account for the deceased’s liabilities before distribution, they can be held personally liable to the creditors to the extent of the deceased liability.

Removing liability of personal representatives when distributing a deceased’s estate

Section 27 of the Trustee Act 1925 aims to protect personal representatives by setting out the means by which they can be deemed to have carried out reasonable enquiries. This allows personal representatives to make distribution to beneficiaries and removes potential creditors from requesting them to be made personally liable.

Protection under section 27 requires personal representatives to place an advertisement in the Gazette and other places as would be expected in the circumstances, noting that they intend to distribute the deceased’s estate and inviting creditors to come forward. Such notice should provide a fixed date for claims to be made by and should not be less than two months.

After expiration of the notice date, the personal representatives are allowed to proceed with distributing the estate providing all liabilities they have been made aware of have been settled. Any creditor making a claim after this time is unable to hold the personal representative personally liable unless the creditor is one whom would have been obvious to the representative on expected searches.

This impact of the Act does not leave creditors unable to make any claim. Instead creditors are able to make a claim directly against the beneficiaries of whom the property is now in the hands of. This of course may result in the personal representative remaining liable when they are also a beneficiary of the estate.