NSW Waiting for Distribution of Deceased Estate Funds

Australia's #1 for Law
Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!
FREE - Join Now

CarmelW

Member
5 March 2015
4
0
1
My mother passed away 16 months ago. One beneficiary was living in Mum's house (due to not being able to rent a house for herself) at the time of Mum's death and has done everything within her power to delay the winding up of the deceased estate. Now that the house has finally been sold with settlement occurring 3 weeks ago, the solicitors are now saying that the funds cannot be distributed until they receive a Statutory Declaration confirming that beneficiaries have never been declared bankrupt from all 3 beneficiaries. The executor & myself have completed this declaration, however the other beneficiary is ignoring all correspondence from the solicitors. My question is can the solicitors legally refuse to distribute the funds to the beneficiaries who have attended to all correspondence promptly and have declared that they are not bankrupt until they receive the third declaration? It is my understanding that a beneficiary's bankruptcy status has no bearing on distributions to other beneficiaries.
 

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
4,962
822
2,894
Sydney
Could it have been a condition of the will
that (one or some or all) beneficiaries
only received distribution from the estate
on the condition that they were not bankrupt at the time?
 

CarmelW

Member
5 March 2015
4
0
1
Could it have been a condition of the will
that (one or some or all) beneficiaries
only received distribution from the estate
on the condition that they were not bankrupt at the time?

Hi Tim,
There is no will.
 

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
4,962
822
2,894
Sydney
Hi Tim,
There is no will.
In which case, the matter is being dealt with as an intestacy,
where there are Letters of Administration?
 

CarmelW

Member
5 March 2015
4
0
1
Hi Tim,
The letters of administration have been done, the Administrator appointed, probate granted. The house has now been sold and all debts have been paid. We are now just waiting for distribution. The solicitors are saying that they do not do the distribution until they have received the signed declaration regarding bankruptcy from all 3 of us. Both the administrator (also a beneficiary) & I have signed and returned this declaration, it is only the other beneficiary refusing to do so.
 

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
4,962
822
2,894
Sydney
Could the other beneficiary be a bankrupt?
 

CarmelW

Member
5 March 2015
4
0
1
It is possible, but I am not certain if she is or isn't. I don't believe that she is bankrupt, I do think her biggest problem is Centrelink payments being affected
 

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
4,962
822
2,894
Sydney
Why would it be relevant that a beneficiary is bankrupt???
So, "yes", then?

The answer is that a bankrupt can be required to hand over testamentary gifts to the Trustee In Bankruptcy.

Further and in the alternative, sometimes, a testator makes a gift conditional upon the beneficiary not being bankrupt.
 

NinjaFlyer

Well-Known Member
23 October 2020
21
0
121
So, "yes", then?

The answer is that a bankrupt can be required to hand over testamentary gifts to the Trustee In Bankruptcy.

Further and in the alternative, sometimes, a testator makes a gift conditional upon the beneficiary not being bankrupt.
But what has that got to do with the distribution and why does the Beneficiary need to sign a Stat Dec? What is the statute/law that requires said Stat Dec, and that further requires and Executor to solicit it before a distribution can be made? A simple 5 min search costing $15 on the NPII database is all that is required to establish if a person is a bankrupt. The Stat Dec is just attorneys generating overheads and billable hours for themselves. Bankruptcy Register Search (BRS) | Australian Financial Security Authority