The benefits of buying a new build

Buying a new build not only means you will benefit from a brand new home to live in, it can also provide you with significant financial and practical benefits when compared with buying an older or resale residential property. Below we highlight some of the advantages of buying a newly-built home, whilst flagging up the potential pitfalls that might arise along the way.

The benefits of buying new

When buying a new build, you may be eligible for financial assistance in the form of a low cost loan through the Help to Buy: Equity Loan scheme. This is a government scheme designed to help over 18s in England buy a new property with just a small deposit. The new scheme will run until March 2023 and, as with the previous scheme, the government will lend homebuyers up to 20%, or 40% in London, of the cost of a newly-built home with a registered homebuilder.

The government has also recently launched the First Homes scheme for local first-time buyers and key workers earning less than £80,000 per year, or £90,000 in London, albeit lower if set by the local authority. The scheme is designed to help those providing essential services or with local connections to get on the property ladder by offering residential properties discounted by at least 30% compared to market prices. With properties already on sale in the East Midlands from June 2021, further designated sites are now set to launch across England. 

Even if you’re not eligible under one of these government schemes, very often developers will provide potential purchasers of a new build with attractive financial incentives, from paying any stamp duty or legal fees due to giving you the option to select certain design and decor aspects for your new home — typically including a warranty to protect you against any defects in respect of the entire build that may later come to light after you’ve moved in.

For existing homeowners, the developer may even offer a part-exchange on your current property. Even though you may get less than you would if you were to sell your house on the open market, by partly funding your new home with the proceeds of a part-exchange deal this can make the process far simpler and less stressful — not least because this will facilitate exchange and completion of both properties, removing the risk of your buyer pulling out.

The drawbacks of buying new

Although the advantages of buying a new build can be tempting, there are also several drawbacks. Unless you buy a new home that is already built, this runs the risk of running into complications during the construction phase – from unavoidable delays due to poor weather, to the developer being unable to complete the build at all down to a lack of funding. Further, with off-plan properties, where you’ve seen the show-home and chosen a replica property, this doesn’t guarantee that yours will be completed either on time or to the same standard.

In most cases, you will be given the option to pull out of your purchase prior to completion, where any warranty should cover your deposit. This means that you will not lose your deposit if a major problem comes to light either during or post-construction. You will also usually be given the opportunity to complete a snagging list for more minor issues. Still, waiting for your home to be completed can be a stressful time, especially if you’re in a chain where the buyer of your existing property needs to exchange and complete by a certain date.

All that said, many of the potential pitfalls arising from buying a new build can be safely navigated with the help and advice of a specialist conveyancer — from helping make sense of the developer’s terms and conditions to the protection afforded to you under any warranty.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Andie Brown

This weekend we said goodbye to our wonderful partner Andie Brown, following a short but very bravely fought battle with Cancer. 

Andie has been with the practice since 1989, working with some of our team for over 25 years. Over that time, she has helped to build an incredibly tightknit unit who feel privileged to call themselves the BSG family. 

We are devastated to have lost such an amazing woman who was like a work mum/sister to all of us. Andie always had our backs whatever the circumstances, and if the chips were down you could find a homemade shepherd’s pie on your doorstep, be marched over Nicky Nook and/or more often than not, given one of the best hugs and Andie therapeutic chats. 

Nothing we can say will ever do justice to Andie, she will be missed more than she could ever have known. Our hearts go out to Andie’s lovely husband Mark, and her beautiful girls, Ellie and Daisy. 

Andie’s funeral will take place on the 22nd December at 10am at the Chaplaincy Centre at Lancaster University. Following the service the burial will take place at Shireshead (St. Paul) Church.

Andie's family would love as many people to attend as possible.

https://www.lancaster.ac.uk/chaplaincy/

The importance of establishing land rights

When a parcel of land is sold, the seller will often retain rights relating to the passage of services over, under and through the land being transferred. These are known as easements, and can include things like rights of drainage or utilities. Equally, the buyer will usually be granted the same or similar rights over the neighbouring land remaining with the seller.

In theory, this all sounds fairly straight forward. If, however, an express repairing covenant is not included when the easement is created, a question that often arises is whether there is an ancillary right or an obligation on either the dominant or servient owner to repair the subject matter of the easement, such as a drainage ditch for surface water. This is especially the case where the medium for the utility is not being used by the land through which it runs.

For example, the seller’s land may benefit from a connection to mains drainage directly from the highway drains for surface water, where the seller has installed a ditch to the drainage pipe which then runs through their land to serve the plot that they have sold. The potential problem here arises in that a seller who does not need to connect to that ditch and, as, such, it is entirely for the benefit of the buyer, is unlikely to be willing to accept responsibility for the ongoing repair and maintenance of that ditch, or at the very least for the cost of the same.

In some cases the rights and obligations of each party may be clearly set out, for example, that the user of the ditch is to repair this at their own cost and, with that, they would have the right to access the seller’s land to do so. Alternatively, if the seller wishes to maintain control over the ditch and who accesses their land, the parties could agree to an obligation on the buyer to pay towards the costs of this. If the drainage ditch only serves the buyer’s land, then the parties may even agree to the buyer being responsible for the full cost.

If, however, the repairing rights and obligations of the parties are not clearly defined from the outset, this can potentially lead to ongoing disputes later down the line. Moreover, where the buyer of the land is planning to develop their plot, this can cause significant and costly delays. This could be, for example, where a dispute arises over whom is responsible for unblocking a ditch, and whether or not the buyer is entitled to access the adjacent land to carry out works.

As a developer, in addition to ensuring that easements required for utilities and services are not overlooked, it is vital that the repairing rights and obligations relating to the subject matter of any easement are properly defined. For this, expert legal advice must always be sought, ensuring that any repairing provisions are adequately and accurately drafted so as to protect your rights and safeguard your investment.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

What is judicial separation?

If you’ve recently separated from your spouse or civil partner you may be considering divorce or dissolution of your civil partnership. However, for some couples, this is not necessarily the best way forward. Instead, if you’re choosing to live apart but are still looking for the court to decide how your finances will be divided, you can apply for a judicial separation. 

What does judicial separation mean?

A judicial separation is a legal separation which is sanctioned by the court in England and Wales. This allows couples to live apart without bringing their marriage or civil partnership to an end. It ratifies the separation, and with the exception of pension sharing, it will enable the court to make financial orders similar to those made on divorce or dissolution.

 When can you apply for judicial separation?

You can ask the court to sanction a legal separation for the same reasons you could file for a divorce or apply to dissolve a civil partnership, although you will not be required to show that the marriage or civil partnership has irretrievably broken down. The grounds for separation, as with divorce or dissolution, include adultery, unreasonable behaviour, desertion for a period of at least two years, two years' separation with consent or five years' separation.

How does judicial separation differ to divorce?

Unlike divorce or dissolution of a civil partnership, you do not need to prove irretrievable breakdown of the marriage or union, and you will not need to be married or in a civil partnership for more than one year to be eligible to apply. Further, whilst a divorce or dissolution require two decrees from the court — a decree nisi and absolute, or a conditional and final order — a legally sanctioned separation requires one decree of judicial separation.

Once a decree of judicial separation has been granted, you will no longer legally be a couple or required to cohabit, but you will remain married where, unlike divorce or dissolution, you will not be permitted to remarry or enter into a new civil partnership.

When is judicial separation appropriate?

There are several reasons why judicial separation may be appropriate, including where one or both parties have religious or moral objections to divorce or dissolution. In other cases, judicial separation may be preferable to officially bringing a marriage or civil partnership to an end because a year has not yet passed since the wedding or civil ceremony. Conversely, more time may be needed to consider whether divorce or dissolution is the right decision.

Indeed, for those who decide to wait it out before getting divorced or dissolving their civil partnership, instead using judicial separation to regulate their finances in the interim, new legislation is set to revolutionise the way in which couples can apply for divorce or dissolution.

When is the new law due to come into force?

 The Divorce, Dissolution and Separation Act 2020 is due to come into force on 6 April 2022. This removes the requirement to establish any facts before being granted an order. Rather, all that will be required is for one or both spouses to provide a legal statement to say the marriage or civil partnership has irretrievably broken down, in this way making it easier and less acrimonious to bring a divorce or civil partnership to an end. Equally, once the new provisions come into force, parties applying for judicial separation will not be required to establish any one of the five factual grounds.

For more information on judicial separation, divorce or dissolution of a civil partnership, expert advice should be sought from a family law specialist. 

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

How do you value an estate for inheritance tax purposes?

If you’re acting as an executor of a deceased’s estate, an important part of your responsibilities will be to value any assets that form part of that estate for inheritance tax (IHT) purposes. Whether or not there’s IHT to pay, this will affect how you report the estate’s value, and the deadlines for reporting and paying any tax. This can often be a complex process, not least where the deceased owned various different types of assets at the date of death.

Below we look at the steps involved to work out the value of someone’s estate.

Step 1: Work out the market value of all the assets

When valuing someone’s estate, ie; the money, property and possessions of the person who’s died — you should start by estimating all the things the person owned with a monetary value, whether jointly held or in their sole name. You will need to add these up to get the ‘gross value’ of the estate. This can include things like their home, savings, stocks and shares, vehicles, jewellery, pension payouts, life assurance, and money they’re owed, such as wages.

You should be able to value some assets easily, for example, money in bank or building society accounts. In other instances, you may need the help of a professional valuer, for example, a chartered surveyor to assess the open market value of the deceased’s home.

Step 2: Deduct any debts, reliefs and exemptions

Having established what debts were outstanding at the date of death and deducted these from the gross value, this will give you the ‘net value of the estate’. This not only includes any debts and unpaid bills the deceased person still owed, but also any funeral expenses.

In addition, you will need to deduct any reliefs that apply to agricultural assets, businesses and business assets, as well as the value of any assets left to spouses, civil partners, charities or that are exempt for other reasons. The figure that you’re left with will give you the value of the estate that’s taxable. This is known as the ‘chargeable estate’.

Step 3: Work out the available inheritance tax threshold

You will need to take the basic threshold of £325,000. Everyone in the 2021-22 tax year has a tax-free IHT allowance of £325,000, known as the nil-rate band, together with a residence nil-rate band of £175,00 where applicable. You can also take any unused thresholds transferred from a late spouse or civil partner’s estate.

Step 4: Compare the value of the estate with the available threshold

You will need to compare the value of the chargeable estate with the available threshold(s). If the value of the estate is less, there’s no inheritance tax to pay. If it’s more, IHT will be due on the excess, typically at a rate of 40%. Once you’ve got all your information and figures together, you will need to report the estate’s value in detail to HMRC.

Step 5: Secure expert advice from a probate specialist

Whilst valuing the estate of someone who has died has been broken down into these relatively simple steps, the rules can become complicated, not least if substantial gifts were made within seven years of the date of death as this reduces the basic IHT threshold, or where assets were given away but for which the donor retained some benefit. The terms of the will can also affect how much tax is payable and who pays it when there are tax-free gifts or items left in trust.

If in any doubt whatsoever, prior to reporting the estate’s value to HMRC, expert advice should be sought from a probate specialist. The financial implications of valuing an estate incorrectly can be significant, particularly if the deceased’s estate is subject to inheritance tax. By securing the advice and assistance from a legal professional, this can give you the peace of mind to move on to the next stage in the process: applying for probate and administering the estate.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

What to do if you’re denied access to your child

Sadly, it’s not uncommon for disputes to arise over child contact arrangements, where being denied access to your child can be heartbreaking, both for you and them. However, there are steps that can be taken to resolve any dispute that you have with the parent or guardian with care, ensuring that you’re able to maintain regular contact with your child moving forward.

Try to reach an agreement

Even if you have parental responsibility for a child but you do not live together, it does not mean you have an automatic right to spend time with them. There is no immediate legal right to contact for a parent. That said, a court will usually grant the non-resident parent access, unless there’s clear evidence that this will be detrimental to the child’s welfare.

In some cases, a carefully worded letter, explaining your point of view, as well as the view the court is likely to take to access, can help to persuade your ex to see your perspective, and to accept that continued contact is in the child’s best interests. By seeking expert advice from a family law specialist, your advisor can help to set out the legal position in writing, together with reassurance in respect of any concerns that your ex may have over granting you access.

If agreement can be reached in this way, your solicitor can draft the terms of that agreement in writing and ask the court to approve those terms. In this way, the agreement will become legally binding. Provided the court accepts that the terms of any consent order are in the child’s best interests, the order will be approved without the need for a court hearing.

Where the matter cannot be resolved informally or by way of an approved consent order, you may instead wish to invite your ex to try mediation, in this way helping you both to reach an out-of-court agreement that is acceptable for everyone without recourse to the litigation.

Apply for a Child Arrangements Order

If you’re unable to agree to contact, you can ask the courts to decide at a hearing. If this happens the result will be a Child Arrangements Order. This is a court order stipulating who has primary care of the child, and the nature of any contact with the non-resident parent or wider family members the child lives with and who they spend time with. Prior to making an application to the Court, it is now a requirement that you attend mediation. However, there are certain exceptions to this such as you have been a victim of domestic abuse or the matter is urgent. However, except in certain cases, for example, involving domestic abuse, the court will want to see that you’ve at least attended a meeting about mediation first.

When a court determines any question with respect to the upbringing of a child, the child’s welfare will be the court’s paramount consideration. Here, a range of factors will be taken into account including the needs and wishes of the child, the capabilities of each parent in meeting those needs, as well as any harm that the child may have suffered or be at risk from suffering. In the absence of any safeguarding concerns, the courts will actively encourage a relationship between the child and both parents, even if objections are raised by your former partner.

A family law specialist experienced with dealing with these types of applications can help to prepare any case on your behalf, helping to ensure that an order is made in your favour for continued contact with your child. By having a well-prepared case, this can go a long way towards effectively defending any challenge raised by the parent or guardian with care.

Enforce a Child Arrangements Order

If you already have a consent or court order in place, but your ex is not keeping to the terms of that order, it’s often best to see if the matter can first be resolved informally. In many cases, this will be in the best interests of all those involved, including your child, especially where the breach or breaches of any order are relatively minor.

Legal advice should be sought as soon as possible so that every attempt can be made to resolve the matter without further recourse to the courts. However, as a last resort, there are legal steps you can take to ask the court to enforce its terms. Your legal advisor can also advise on all other available options, including further family mediation.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Are prenuptial agreements legally binding?

Prenuptial agreements are becoming increasingly popular in the UK. Although prospective spouses rarely enter into a marriage anticipating that their union will end in divorce, more and more pragmatic couples are anxious to plan for this possibility — typically to protect inherited wealth or pre-marital property on any future breakdown of the relationship. 

Still, entering into a prenuptial agreement doesn’t necessarily guarantee protection over any assets acquired either prior to or during the course of the marriage, least of all where both parties have not sought independent legal advice before entering into this type of agreement.

Below we look at what a prenup is and how this works, and what requirements need to be met to help maximise the prospects of an agreement being upheld by a court on divorce.

What are prenuptial agreements and how do these work?

A prenuptial agreement is a legal contract that sets out how any assets and financial resources should be divided between a couple if the marriage were to breakdown. This is an agreement that is entered into prior to the marriage taking place, although it’s also possible to enter into a similar agreement after the event. This is known as a postnuptial agreement.

In either case, the agreement sets out a couple’s rights regarding any property, income and other assets acquired both individually and jointly. In this way, the agreement is designed to provide the parties with clarity and certainty around the financial arrangements should they ever separate, thereby reducing the risk of acrimonious or protracted divorce proceedings.

What are the rules relating to prenuptial agreements?

Under UK law, a prenuptial agreement is not automatically legally binding, where the parties to the agreement cannot override the court's discretion to decide how to redistribute their assets and income on an application for financial remedy. That said, the court must give appropriate weight to a prenuptial agreement as a relevant factor under the Matrimonial Causes Act 1973, in some cases, even decisive weight, depending on the circumstances.

In accordance with the guidance from the Supreme Court in the case of Radmacher v Granatino [2010] UKSC 42, the court should usually give effect to a prenuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.

Should legal advice be sought for prenuptial agreements?

The manner in which a prenuptial agreement is entered into will play a crucial part in how much weight the agreement is given by the court, where seeking independent legal advice will amount to strong evidence of a party's understanding of its implications.

In its assessment of fairness, various other factors will be taken into account by the court, including the welfare of any child(ren), the duration of the marriage, the responsibilities undertaken and assets acquired during the course of the marriage, and the future needs of both parties. Still, by securing the services of a family law expert before you get married, this will give your prenup the best chance of being upheld in the event of divorce.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

How much is Stamp Duty now?

If you’re buying a main home there is no stamp duty to be paid on the portion of the property priced at or below £125,000. So, if you spend up to £250,000, you’ll get the first £125,000 tax free, but will pay two per cent tax on the portion above that.

Anything you spend between £250,001 and £925,000 will incur 5% tax, rising to 10% for properties priced between £925,001 to £1.5 million. If you spend above £1.5 million, you will pay 12% in stamp duty tax. Stamp duty rates are higher for those buying a second home.

Stamp Duty Land Tax rates from 1st October 2021

Up to £125,000 Zero

The next £125,000 (the portion from £125,001 to £250,000) 2%

The next £675,000 (the portion from £250,001 to £925,000) 5%

The next £575,000 (the portion from £925,001 to £1.5 million) 10%

The remaining amount (the portion above £1.5 million) 12%

First Time Buyers

If you’re a first-time buyer you won’t pay any tax on homes priced at or below £300,000. However, you will pay five per cent on a property, or the portion of a property, priced between £300,001 and £500,000. If the property you’re buying is priced above £500,000, you won’t be eligible for a saving and you’ll have to pay the stamp duty rates above.

Protecting inherited property on divorce

If you’re recently separated or contemplating separating from your spouse you may be  concerned about the division of marital assets, especially if you’ve inherited money or property during the course of the marriage, or are likely to do so prior to getting divorced.

Below we look at how any past legacy or future inheritance prospects are likely to be divided or factored in on divorce, and what steps you can take to protect your financial interests.

How will any inheritance be divided on divorce?

In England and Wales, any money or other assets inherited either before or during your marriage are not automatically excluded from the matrimonial financial pot. This means that any legacy will not automatically be ring-fenced and, as such, may have to be shared between you and your former spouse or civil partner on divorce or dissolution of the civil partnership.

That said, every case is different. Ultimately, therefore, whether or not you will have to share your inherited wealth on divorce depends on the specific circumstances of your case. The primary consideration will be the welfare of any dependent children, although other factors could include the size of the inheritance, when this was received, the manner in which the inheritance was dealt with during the marriage and the financial needs of both parties.

If any inheritance has been mingled in with matrimonial assets, for example, put towards the cost of the family home or to pay off the mortgage, you’re much more likely to have to share this with your ex than if this money or property has been kept entirely separate from the family’s finances. Your inherited wealth is also more likely to go into the joint ‘pot’ where the financial needs of one or both parties cannot be met from the matrimonial assets alone.

Will any future inheritance be taken into account?

With regard to any future inheritance, this will not usually be taken into consideration when the financial aspects of divorce are dealt with by the court. This is because a potential legacy cannot usually be determined with any degree of certainty, where a testator could easily change their mind. It can also be difficult to gauge the life expectancy of any testator.

That said, albeit exceptionally, where there is an expectation of a significant inheritance after separation and a divorcing spouse is likely to receive that inheritance imminently, the court may adjourn part of a financial application on divorce until the inheritance is received.

How can any inheritance be protected on divorce?

If you wish to protect inherited wealth in the event of divorce, you should consider entering into a pre- or even post-nuptial agreement with your spouse or civil partner. This does not automatically protect any legacy if you later separate and subsequently divorce, but if entered into freely and fairly by both parties it may be taken into account by the court.

In many cases, however, protecting any inheritance is not something that a couple will seriously contemplate, not until the relationship begins to breakdown and divorce seems likely. Still, in these circumstances, agreement can still be reached as to who gets what without leaving it for the courts to decide. By seeking expert legal advice from a divorce specialist at the earliest possible opportunity, this can help you to navigate this often fraught and stressful process, and to help negotiate a settlement to safeguard your financial future.  

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

How to deal with the debt of someone who has died

Being responsible for administering the estate of a loved one after they’ve died is no easy task, and not without risk, not least if they’ve left debts behind. It’s a common misconception that unpaid debts will be automatically written off on a person’s death, but this is simply not the case. As such, as either an executor or personal representative of the deceased’s estate, discharging any outstanding debt will form an important part of your responsibilities.  

Am I personally liable for the debt of a loved one?

In the UK, debt isn’t inherited, which means that family or friends will not be liable for the individual debts of the deceased. This means that when a loved one dies with an outstanding loan, credit card or any other debts, provided these were in the deceased’s sole name they will not pass to you or anyone else, not unless you or any other individual provided a guarantee. 

However, even if you’re not directly responsible for repayment of the debt, for example, as either a joint account holder or guarantor, an outstanding balance will still need to be paid from the deceased’s estate prior to any assets being distributed amongst the beneficiaries. 

How do I know what debts are owed by the deceased? 

Part of acting as an executor or personal representative is taking reasonable steps to establish what debts might be owing and if there is enough value in the estate to discharge these. There are various different ways of doing this, although checking the deceased’s paperwork and bank statements, both manually and online, is usually the best place to start.

Needless to say, it’s possible that some debts may go undetected during a search of the deceased’s financial affairs, where paperwork or records have been lost, destroyed or deleted, especially if a debt dates back several years. It’s also not uncommon for unidentified creditors to surface at a later date, after an estate has already been distributed, where you could be held personally liable and be required to repay the debt out of your own pocket. 

To ensure that you’re protected from any liability, you can place an advertisement in the London Gazette and local newspapers requesting unknown creditors to come forward —known as a “Deceased Estates Notice”, this will demonstrate that sufficient steps have been taken to locate creditors prior to distribution of the estate. You’re not under any legal obligation to place a notice, but if you fail to do so you could put yourself at serious risk.

In what order do any debts need to be discharged?

In some cases, having determined the total value of the deceased’s estate, there may not be sufficient funds to pay off any outstanding debt. If the deceased had more debts than assets, their estate will be classed as insolvent. This means the beneficiaries won’t receive anything, where all assets must instead be used to clear the outstanding liabilities.

In these circumstances, executors and personal representatives will need to discharge each debt in a particular order. This is known as the order of priority, where any failure to follow this order correctly could again result in you becoming personally liable to the creditors. The order of priority means that secured debts such as a mortgage must be paid prior to even funeral expenses and costs relating to the administration of the estate.

Given the risk involved of dealing with an insolvent estate, you may want to consider renouncing your role and responsibilities as an executor, although ideally this should be done before you have become actively involved in dealing with the deceased’s affairs.

Should I seek legal advice when dealing with a deceased’s estate?

Given the potential consequences of failing to identify all outstanding creditors or incorrectly administering an insolvent estate, it's often best to seek expert advice from a probate specialist as soon as possible. In this way you can explore the options available to you and what steps to take to protect yourself from any personal liability.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.