Creditor of Beneficiary wants to know how much Beneficiary has been left in a Will

[daveseekinfo]

Hi, I am the executor of my mother's will and have been contacted by the creditor of a relative, (the relative is a beneficiary of the will); the creditor wants to know how much my relative has been left in my mother's will.

As I live overseas I won't be able to travel to the UK to determine how much was left in my mother's bank accounts for quite some time due to travel restrictions, so I'm not even in a position to answer that question for the time being. The accounts are locked until I turn up at the bank in the UK with the original will and the death certificate.

Two questions I have are as follows:
1. Can the creditor legally ask me what has been left to my relative in my mother's will or must they go directly to my relative?
2. The will states that the inheritance is not to be paid to my relative until they reach the age of 25 years, which is still a few years away. Does the creditor have the right to request payment from the inheritance as soon as the will is executed, or must they wait until my relative reaches 25 years of age as mentioned in the will?

I haven't responded to the creditor yet and wanted to get some advice from this forum first. Thanks in advance.

daveseekinfo

[ostell]

Tell them to do one, they have no rights in this.

[daveseekinfo]

Tell them to do one, they have no rights in this.

Thanks, but I was wondering if there is something specific in law that I can refer to which states that the creditor has no right to ask about the beneficiary's inheritance?

Any advice?

[des8]

Your only problem will be if the beneficiary is a bankrupt. and you pay them directly and then can't recover the legacy.
If that is the case the trustee in bankruptcy is the one you deal with.; not the beneficiary nor the creditor

Here's an article about the situation: Are bankrupt beneficiaries a risk to executors? - Barker Evans Private Client Law (barkerevanslaw.co.uk)

[daveseekinfo]

Hi Des8, unfortunately I get this message when I try to go on to that website:
**

Your access to this site has been limited by the site owner

Your access to this service has been limited. (HTTP response code 503)

If you think you have been blocked in error, contact the owner of this site for assistance.

[des8]

Works for me, so here's a copy and paste

Home » Blog » Are bankrupt beneficiaries a risk to executors?
Bankrupt beneficiaries are quite common. Executors need to be aware of how to deal with them.

There are statutory rules about how executors should deal with bankrupt beneficiaries.

Personal representatives who don’t follow the rules could face legal action.

It’s an executor’s responsibility to know if a beneficiary is bankrupt.



So, what can you do to protect yourself as an executor if there’s a bankrupt beneficiary?

First of all we need to look at the reasons for treating this type of beneficiary with caution. Why are bankrupt beneficiaries different?

Perhaps you’re wondering why you need to be specially careful when dealing with bankrupt beneficiaries? Why should their bankruptcy affect how you carry out your job as executor?

The reason is, when a bankruptcy order is made, the bankrupt person no longer has the right to control their assets. Virtually everything they own comes under the control of an official who is appointed to be ‘trustee in bankruptcy’.

The Insolvency Act 1986* authorises a trustee in bankruptcy to claim the assets of the bankrupt person up until the bankrupt is discharged from bankruptcy**. That includes any gifts or inheritances the bankrupt person has the right to receive. Should executors delay transferring assets?

You might well have a lot of sympathy for a beneficiary who’s run into financial problems and want to help them. Most bankrupt beneficiaries don’t want their inheritance to be used to pay off creditors.

Some executors and bankrupt beneficiaries think there’s an easy way to avoid the trustee in bankruptcy. They agree between them to delay transferring the inheritance until the beneficiary is discharged from bankruptcy.

But that’s not going to work. Just delaying transfer of the assets to the beneficiary isn’t going to prevent the trustee in bankruptcy getting hold of an inheritance.

The legal right to an inheritance is known as a ‘chose in action’. That means it’s a right that can be enforced through the courts.

When a person is declared bankrupt their right to receive an inheritance passes to the control of the trustee in bankruptcy. The trustee in bankruptcy can enforce that right against the personal representatives of the deceased’s estate and make them hand over the inheritance. What if the beneficiary wants to keep an inheritance secret?

Not surprisingly, bankrupt beneficiaries often want to look for ways to hide their inheritances.

Example:

A bankrupt beneficiary tells you they want to give up or ‘disclaim’ their inheritance. They might hope that it will be re-distributed to another member of their family who will secretly hold it for them until they’re discharged from bankruptcy.

The Insolvency Act puts an obligation on a bankrupt to declare any assets he or she becomes entitled to receive during the period of the bankruptcy*. Executors who help beneficiaries to put assets out of the reach of the trustee in bankruptcy can end up in serious difficulties.

Unfortunately, we can’t rely on bankrupt beneficiaries doing what they’re supposed to do; you have to make sure you protect yourself.

A bankrupt beneficiary might try very hard to persuade you to transfer their inheritance either to them or someone they know by convincing you they’re going to declare it to the trustee in bankruptcy. But why should you take the risk? Action by the trustee in bankruptcy

Don’t give in to pressure from a beneficiary.

If you transfer the inherited assets to anyone other than the trustee in bankruptcy without getting formal authority, you will be personally liable.

“You may be forced to pay the trustee in bankruptcy an amount equal to the value of the assets transferred to the beneficiary.”

You’re unlikely to escape that risk by claiming you didn’t know the beneficiary was bankrupt. And you won’t be entitled to get reimbursed from the deceased’s estate if the trustee takes action against you. Executors must protect themselves

There are methods executors can use to make sure that dealing with bankrupt beneficiaries isn’t a risk.

Even if there are no insolvent beneficiaries at the start of the administration of a deceased’s estate, there could be a bankruptcy that arises during the course of the administration.

I’ve even known situations where beneficiaries have got themselves into serious financial trouble because they’ve got carried away with the anticipation of getting an inheritance.

“- there’s nothing like the prospect of getting a legacy to make some people overspend or jump into risky business ventures.”

A trustee in bankruptcy has statutory obligations too

One other point to notice is that, if the trustee in bankruptcy fails to follow the statutory rules the trustee might not be entitled to claim a bankrupt beneficiary’s assets.

Executors should check first before transferring a beneficiary’s inheritance to the trustee in bankruptcy just in case the trustee hasn’t complied with all of their obligations.

Points to know

• Close family members and friends can be secretive about their financial problems;
• it’s not difficult for creditors and trustees in bankruptcy to find out about an inheritance; and
• an executor’s responsibility is to be impartial and administer the deceased’s estate correctly – even if that’s detrimental to a member of the family.

---

Executors, you owe it to yourself and the deceased to prevent problems with bankrupt beneficiaries

There are ways you can protect yourself when dealing with bankrupt beneficiaries and actions you must take.

I can show you the steps and give you tools to help you. Read more here.

---

*s291 Insolvency Act 1986

** usually 12 months after the bankruptcy order

Personal representative is a legal term for a person authorised to administer a deceased person’s estate either by appointment in a will or under the intestacy rules.

---

Image by Stuart Miles courtesy of Freedigitalphotos.com

Article by Rosamund Evans

[ostell]

But the OP didn't mention anything about the beneficiary being bankrupt.

[des8]

Did say IF:
"Your only problem will be if the beneficiary is a bankrupt."

Sometimes one has to pull teeth to get the full story as you well know ostell

[ostell]

Yep, know the problem

[daveseekinfo]

Hi all, back again.

Something else related to the above that I'm seeking to determine is what types of third parties are allowed to ask to see a copy of the full will?

I thought that wills where the assets of the estate are below a certain amount and which don't require a probate application are essentially confidential and not public information.

Can anybody advise please?

[des8]

If the will does not require probate it remains a private document between the executors and beneficiaries

Guessing it might be to do with bankrupt beneficiary bear in mind it’s an executor’s responsibility to know if a beneficiary is bankrupt.

[daveseekinfo]

If the will does not require probate it remains a private document between the executors and beneficiaries

Guessing it might be to do with bankrupt beneficiary bear in mind it’s an executor’s responsibility to know if a beneficiary is bankrupt.

Thanks DES8, is it also the case even for government agencies and their affiliates etc?

This relates to a deposit protection organisation holding a rental deposit my mother paid a long time ago and wanting to identify me as the legal executor of the estate. I rang them last week to ask what proof they need and they said it was just the front page of the will which names the executors, and the signature page at the back.

This week they came back asking for the full will, I'm not keen to email things which are confidential unless there is a good reason, so wanted to get an understanding of what they are entitled to ask for first so I can be a little bit better informed before I respond to them again.

[des8]

A deposit protection organisation(Computershare for example) have no special position.

However, altho' the will is confidential to executor and beneficiaries, unless there is some particular reason for not sending them a copy I wonder if it is
worth the trouble to stand upon the principle.
Remember as executor you have a duty to act expeditiously, and withholding a copy of the will might be seen as delaying settlement unnecessarily