NSW Rights of Beneficiary to a Potential Bankrupt Deceased Estate?

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21 May 2018
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Amongst others, I was named as a beneficiary in a deceased estate that had the potential to be declared bankrupt. The deceased was a sole business operator, who died in 2014 and had a lot debt, but also a substantial life insurance policy.

The business also had varying (relatively minor) assets such as FFE and stock. The executor of will made a part payment to debtors about almost 2 years ago, but retained $165k I believe in order to pay herself and her legal representative, The will gave her the right to take a fee, based on her time. I believe this has contributed to the excessively drawn out time it has taken to administer the estate. I hold no expectation of receiving anything but I am appalled at the lack of respect that has been shown to all concerned.

I had been advised that a final distribution was planned to take place prior to the deceased's 3rd anniversary. Upon hearing this I communicated an expectation of being furnished with a full summary of all estate income and outgoings, including an itemised account of any payments made from the estate to the executor and her solicitor. The 3rd anniversary has now passed with no advice of a finalisation.

About 10 days ago, I sent an email requesting an update but have heard nothing. I am simply wanting to find out where I stand in attempting to gain some transparency and hold the executor and/or her legal representative accountable.
 

Rod

Lawyer
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Get a lawyer. The executor may have breached their duties.
 

AdValorem

Well-Known Member
20 August 2015
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Hi Elizabeth

I agree with Rod, engage a lawyer.

See section 205 of the Life Insurance Act 1995. It says that money paid to the estate of a deceased person are protected and cannot be used for the payment of debts. Did the executor use the life insurance payout to cover the deceased's debts? The life insurance money would not have been protected if the will said that the insurance money must be used to pay off debts.
 
21 May 2018
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Thanks for the information. I've checked the will. It gives permission for life insurance or superannuation proceeds to be used to pay personal debt. Fortunately in this case the superannuation went directly to the widower so at least someone (besides the executor and her legal representative) got something.

Hi Elizabeth

I agree with Rod, engage a lawyer.

See section 205 of the Life Insurance Act 1995. It says that money paid to the estate of a deceased person are protected and cannot be used for the payment of debts. Did the executor use the life insurance payout to cover the deceased's debts? The life insurance money would not have been protected if the will said that the insurance money must be used to pay off debts.