Deceased Estate Meaning
The term Deceased Estate refers to all the assets, liabilities and debts that belong to a person who has passed away. In most cases, a deceased estate is dealt with according to instructions left behind in a Will. Depending on the conditions of the Will, assets are typically divided among the deceased person’s beneficiaries, such as their family members and friends.
A deceased estate includes all of your assets, liabilities and debts, such as:
What Happens to the Debts of a Deceased Estate?
Most types of debt will persist after you pass away. Creditors are entitled to reclaim any money they are owed before the estate makes distributions to beneficiaries. If a deceased estate is solvent, this process is typically managed by the executor of the Will. As part of their duties, the executor will notify creditors, process their claims and make repayments where required. If a deceased estate has insufficient assets to repay its outstanding debts, it is considered insolvent. In some cases, creditors may apply to have an insolvent deceased estate administered under Part XI of the Bankruptcy Act 1966.
It is important to note that creditors may only claim the money they are owed from the deceased estate. If the estate has insufficient money and assets to repay the debts, the beneficiaries are typically not liable to repay debts. If a debt is shared between multiple people (such as spouses), you are still liable for your portion of the debt.
What Causes an Administration of a Deceased Estate (Part XI)?
An Administration of a Deceased Estate (under Part XI of the Bankruptcy Act) occurs when an estate is insolvent with debts of $10,000 or more. This typically occurs due to one of two circumstances:
Where a creditor, Administrator, executor or legal personal representative wants to bankrupt a deceased estate, an Administration of a Deceased Estate (Part XI) will take place. An order for the Administration of a Deceased Estate can only be made by the Federal Circuit Court or the Federal Court. Once an order of the Court has been obtained, an independent Trustee will be appointed to administer the estate and ensure creditors are repaid.
What Happens During the Administration of a Deceased Estate?
The administration of an insolvent deceased estate shares many similarities with the bankruptcy proceedings for a living person. Once a Trustee has been appointed, they will investigate the estate’s financial affairs, assets, debts and liabilities. After that, the Trustee will assess claims by creditors and determine how any money and assets should be distributed. This process may involve the Trustee realising assets and distributing the proceeds equitably among creditors. The order in which distributions are made to creditors depends on the type of debt:
The major benefit of appointing a Trustee to administer a deceased estate is that they may set aside voidable transactions. This can potentially increase the value of the estate, allowing it to better repay creditors and other beneficiaries.
How can SV Partners help?
SV Partners are personal insolvency professionals. Our experienced team can act as an independent Trustee to conduct investigations and administer a deceased estate under Part XI of the Bankruptcy Act. As professional advisors, our role is to help address personal insolvency and personal bankruptcy issues with advice and skills that allow all parties to navigate the situation with sensitivity and care.
We understand that dealing with the death of a loved one can be especially challenging. When administering a deceased estate, we always aim to provide support that takes the burden off your shoulders. For more information on our other services such as court liquidation or litigation support, visit our FAQ section, or contact us on our confidential assist line by phoning 1800 246 801.