Paul McDougall

Paul McDougall, associate director in the company’s insolvency practice, said this is not the case if the deceased debtor leaves an estate with assets.

“When a debtor dies, no one is required to settle their debts, unless the debts were in joint names such as a joint loan or overdraft,” he said.

“However, if the deceased had assets, these must be used to pay the outstanding debts before beneficiaries can receive any inheritance. This underpins the main role of an executor.”

If the level of the deceased’s assets is insufficient to settle the level of outstanding debts, the estate is classed as insolvent and an executor has an obligation to place the estate into an insolvent position.

This is completed with the assistance of an approved money advisor, but more likely an insolvency practitioner.

In accordance with section 14 (3), an executor can apply to the Accountant in Bankruptcy for the bankruptcy of the deceased estate. The application must be made no longer than a year since the executor knew that the estate was insolvent and likely to remain so.

“If the executor misses this deadline, an application can still be made for the sequestration of the estate, but through a court process,” said Mr McDougall.

“This is a longer and more costly route, so executors are advised to make the deadline if they can.

“This removes the need for formal confirmation and appointment of an executor and an application to sequestrate a deceased estate is processed by an application made to the Accountant in Bankruptcy.”