Insolvent Estates
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Welcome to our page relating to Insolvent Estates.

We are a firm who specialise in dealing with probate and estate administration work.  At Seatons, we offer a helpful and friendly service with low fees that provide exceptional value for money.  Please call us today for a free initial no obligation chat on 01536 276300 or use our online enquiry form.

Insolvent Estates

If you have recently lost a close relative and are dealing with the administration if named the executor of their estate, it is important to have a basic knowledge of probate law in order to understand and implement your responsibilities lawfully and effectively. It could be that you have become executor to an insolvent estate, in which case this page will provide you with a brief summary of your obligations in this area and the order in which debts should be paid.

Solvent Estates

An estate is solvent when there are sufficient assets to pay funeral, testamentary and administrative expenses and debts and all other liabilities in full. If you need help with sorting a solvent estate out, then call us on 01536 276300 for a free initial no obligation chat.

Insolvent Estates – Personal Representatives

If there are insufficient assets to pay the debts and liabilities, the estate is insolvent.

The Personal Representatives have a legal obligation to deal with the debts of the estate. If the estate is not administered correctly then the Personal Representatives can be held personally liable. Different rules as to the payment of debts apply depending upon whether it is a solvent or insolvent estate.

Insolvent estates can be difficult to deal with. An insolvent estate needs to be administered in accordance with the Administration of Insolvent Estates of Deceased Persons Order 1999.

There is a procedure for dealing with insolvent estates and legal advice is highly recommended, as the process can be complicated.

The Order in Which Debts Should Be Paid

It is important for the Personal Representative to be aware that in the case of an insolvent estate, the creditors are entitled to be paid in a strict order of priority:

  1. SECURED CREDITORS > Given Preference to other creditors
  3. SPECIAL PREFERENCE DEBTS > Friendly Societies
  4. PREFERENTIAL DEBTS > PENSION ARREARS (State/Private) & Money Owed to Employees
  7. DEFERRED DEBTS > Loans from Deceased Spouse

Joint Property

If there is JOINT PROPERTY and there is an Insolvency Administration Order then Joint Property is taken into account.

Unsecured Debts

For unsecured debts, payment should be made on a pro rata basis in proportion to the net assets and the value of each individual debt paid from the insolvent estate. This order of payment cannot be varied by the Personal Representative, or under the terms of the Will or intestacy rules.

Personal Representative’s Liability

If the Personal Representatives do not follow the statutory order under the insolvent estate, they will incur personal liability for “superior” debts that have been left unpaid. Therefore, if there is any possibility that there is an insolvent estate, the personal representatives should seek legal advise to ensure that they observe the statutory order strictly when paying debts.

In practice therefore, if the total assets are worth £10,000 and the funeral and testamentary expenses amount to £2,000 leaving a net estate of £8,000 and there are other unsecured debts totalling £16,000, then the creditors will receive 50% of their outstanding debt.

Who Pays The Legal Fees?

Please note that if there are assets in the estate these can be used to pay the legal costs involved in administering the insolvent estate. Therefore, if you feel that you might need to deal with an insolvent estate then so long as there are enough assets to cover the funeral account and the legal costs then you will not personally have to pay any of the legal costs involved for sorting out and administering the insolvent estate.

We at Seatons specialise in dealing with insolvent estate work and quite often we can deal with the estate without there being any cost to you or the Personal Representative at all.

Please call us for a free initial no obligation chat today on 0800 3 10 11 12.


Dealing with insolvent estates can be dangerous and it is essential if you are acting as a Personal Representative that you get it right.  If you don’t, then you could end up becoming personally liable for any errors that you make.  We at Seatons specialise in dealing with insolvent estate work and quite often we can deal with the estate without there being any cost at all to you or the Personal Representative.

Please call us on 0800 3 10 11 12 for a free initial no obligation chat.

Adrian Chambers - Seatons Solicitors

Insolvent Estate Specialists

I’m Adrian Chambers and specialise in Insolvent Estate matters. We aim to provide our clients with an outstanding legal service.

We will help and support you and most importantly we work hard for you.

If you need help administering a loved one’s estate, please click here for further information.

For information about our costs on probate work please click here.

Please contact us for a free initial no obligation chat on 01536 276300 or contact us online.

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