56. Deceased insolvents

Dealing with the affairs of a debtor who dies during the bankruptcy process or the estate of a deceased insolvent

Introduction

56.1 Background and legislation

The debts a person owes when they die are not discharged on death (save for any specific provision, such as an insurance policy) and any debts remain to be paid by their estate.

So far as the administration of the estates of a debtor who dies before the presentation of a bankruptcy petition is concerned, the Administration of the Insolvent Estates of Deceased Persons Order 1986 operates to extend and modify the provisions of the Act to the administration, in bankruptcy, of the estate of the deceased person. The order will be an insolvency administration order and not a bankruptcy order. Similarly, a person subject to such an order is known as a deceased debtor, and not a bankrupt. As in bankruptcy the Official Receiver becomes trustee on the making of the Order

For deceased bankrupts (that is, those debtors who die after the presentation of a bankruptcy petition), the Administration of the Insolvent Estates of Deceased Persons Order 1986 provides that, unless the court orders otherwise, matters shall proceed as if the debtor were still alive, subject to certain special provisions on which further guidance is provided (see Debtor dying after a bankruptcy petition is presented below) The legislation also contains provisions relating to other forms of personal insolvency, but these are not covered in this guidance except for brief reference to IVAs.

Debtor dying prior to the presentation of a bankruptcy petition

56.2 Insolvency administration order and deceased debtors

Where a debtor dies prior to the presentation of a bankruptcy petition, any order for the administration in bankruptcy of their insolvent estate is referred to as an insolvency administration order and not a bankruptcy order. Similarly, a person subject to such an order is known as a deceased debtor and not a bankrupt.

Where a debtor dies after the presentation of a bankruptcy petition, the guidance in ‘Debtor dying after a bankruptcy petition is presented’ of this chapter should be followed.

56.3 Presentation of a petition for an insolvency administration order

The persons who may present a petition for an insolvency administration order are the same as those who may present a petition for bankruptcy, except that the debtor themselves cannot, obviously, present the petition [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 1]

The power of the debtor to present the petition is instead given to the debtor’s personal representative [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1 part I, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 3, Form 6] in relation to which no deposit is payable [The Insolvency Proceedings (Fees) Order 2004 article 6(1)].

56.4 Grounds for an insolvency administration order

One of the requirements for making an insolvency administration order is that the debt, or one of the debts, in respect of which the petition is presented is payable as at the date of the petition, or has since become payable, and has not been paid or secured for, or has no reasonable prospect of being able to be paid when it falls due. The other essential requirement is that it is reasonably probable that the estate is insolvent [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 5]. This requirement must be demonstrated to the court to obtain an insolvency administration order. There is no statutory demand requirement [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II] and the court has no power to refer a case to an insolvency practitioner for a report.Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 3]

56.5 Petition by a creditor for a future debt

In addition to a creditor being able to petition in respect of a debt for a liquidated sum equal to or exceeding the bankruptcy limit, a creditor may petition for a future debt if, due to the death of the debtor, there is no reasonable prospect of payment being made when the debt falls due and there is a reasonable probability that the estate will be insolvent [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 3].

56.6 Petition by the supervisor of a voluntary arrangement

A petition may be presented by a supervisor of an individual voluntary arrangement (IVA) which has been approved prior to the debtor’s death and where continuance of the arrangement is dependent on the receipt of payments from the debtor’s future earnings.

The supervisor does not have to demonstrate default with the terms of the arrangement, but merely needs to show to the court that, without the debtor’s continuing involvement in the arrangement, it is not feasible for it to continue. Neither a supervisor nor a creditor can petition on the grounds that the IVA contained inaccurate or misleading information, as the relevant provision [Section 276(1)] is not extended to deceased debtors.

56.7 Service of petition

An insolvency administration petition shall, unless the court directs otherwise, be served on the personal representative of the deceased and may be served on such other persons as the court may direct [Administration of Insolvent Estates of Deceased Persons Order 1986 schedule 1, Part II, paragraph 2]. This latter provision enables service where a personal representative has not been appointed.

If a liquidator (within the meaning of the EC Regulation on Insolvency Proceedings) has been appointed in another EU state, the petition shall also be served on them.

56.8 Restrictions on dispositions of property

A personal representative is restrained from disposing of any property of the debtor in the period from the date of the presentation of the petition for an insolvency administration order to the date the estate vests in the trustee. If the disposition is in good faith and for value then there can be no recovery by any subsequently appointed trustee in respect of the disposition [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 5]. It is likely that, for a disposal to have been in good faith, it will have had to have been made without notice of the petition. Ratification by, or consent of, the court would remove any uncertainty here.

In respect of this provision, it is likely that the date of the presentation of the petition should be the actual date, and not the deemed date (which is the date of death) [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 12].

56.9 Ratification of disposals

Any dispositions made by the personal representative in the relevant period are void unless made with the consent of the court or subsequently ratified by it. Where a disposal is considered void, the related money or goods should normally be recovered for the estate.

56.10 Administration proceedings in another court

A petition for an insolvency administration order may not be presented where proceedings for the administration of the deceased debtor’s estate have been commenced in another court [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 5].

An example of such proceeding would be civil proceedings commenced in the Chancery Division of the High Court for the administration of the estate. These proceedings may have been instigated by the personal representative, or any person interested in the estate such as a creditor, legatee (beneficiary under the will), or next of kin. Such proceedings may be transferred to the bankruptcy court where it appears that the estate is insolvent, thus enabling an insolvency administration order to be made [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 5].

56.11 Official receiver appointed as interim receiver

The court may, at any time between the date of the presentation of a petition for an insolvency administration order and the making of the order, appoint the official receiver as interim receiver to protect the assets [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 13].

Where so appointed, care should be taken by the official receiver to observe the terms of the order, which may restrict their duties as interim receiver and the assets to be dealt with by them. In the absence of any such restrictions, the interim receiver has all the powers, duties and immunities of a receiver and manager [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 13]. Immediate possession should be taken of the deceased debtor’s assets which should be protected pending the hearing of the petition.

The personal representative has a duty to co-operate with the interim receiver and provide them with details of the assets comprised in the deceased debtor’s estate [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 13].

56.12 Commencement of the insolvency administration proceedings

Provided that the court is satisfied regarding the grounds, it may make an insolvency administration order [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 5, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 7] and the proceedings commence upon the making of the order [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 10].

56.13 Appointment of the official receiver as trustee

On the making of an insolvency administration order, the official receiver is appointed trustee of the deceased debtor’s estate, which has the effect of removing control of the estate from the personal representative [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 14]

56.14 Duty of the official receiver to investigate the deceased’s affairs

The official receiver has no statutory duty to investigate the conduct and affairs of the debtor unless they think fit, but may make such report (if any) to the court as they think fit [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 16].

In practice, there is unlikely to be any merit in an investigation into the affairs of the debtor, but if the official receiver considers that there is prima facie evidence of wrongdoing by someone other than the deceased debtor, they may report it as appropriate. In particular, there is an offence of receiving, in the 12 months before death, property obtained on credit by the deceased [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 29].

56.15 On the making of an insolvency administration order, notices similar to those issued on the making of a bankruptcy order should be issued.

The notices should be headed:

‘In the matter of the Administration of Insolvent Estates of Deceased Persons Order 1986’ The notices should refer to the making of an insolvency administration order (not a bankruptcy order) and state that the debtor is deceased. The deceased debtor should not be referred to as ‘the bankrupt’, but as ‘the deceased debtor’.

Similarly the official receiver should arrange for the mandatory Gazette notice to be published and, at the official receiver’s discretion, a local advertisement.

56.16 Duties of a personal representative after the making of an insolvency administration order

Where an insolvency administration order has been made, the personal representative’s duties with regard to possession of the estate are similar to those of a bankrupt. The personal representative should notify the official receiver of any assets which may be claimed for the estate, provide an inventory of the estate, attend on the official receiver at such times as reasonably required and provide information regarding the deceased’s assets and affairs [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 17].

If the personal representative does not fulfil these obligations, they guilty of contempt of court and may be punished accordingly1. Similarly, the personal representative is liable to a private examination in the event of non-cooperation.

56.17 Contact with the personal representative

The official receiver should make contact with the personal representative as soon as possible following the making of the insolvency administration order. The making of the order has the effect of removing control of the estate from the personal representative and it is therefore important that no dealings are carried out by the personal representative subsequent to the order.

The personal representative may be a professional such as a solicitor or banker, or may be a relative or acquaintance of the deceased. In the latter case, the official receiver should, in carrying out their duties, exercise care to avoid adding to any bereavement distress which the relative may be experiencing.

56.18 Statement of affairs requirement

There is a requirement for the personal representative or, where there is no such person, such other person as the court may direct, to lodge a statement of affairs within 56 days of the making of the insolvency administration order. This period may be extended by the official receiver or the court, or the personal representative may be released from the requirement [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 15]. Due to the information that will be contained in the statement, the duty to provide one should generally be enforced.

56.19 Notice to personal representative requesting a statement of affairs and other information

As soon as possible after the making of an insolvency administration order, the official receiver should send the statement of affairs (SADI) to the personal representative with the standard notice (NPRDD). The standard notice also contains a supplementary information sheet for completion by the personal representative, and requires that they provide a copy of the death certificate and a copy of the last will made by the deceased.

56.20 Content of statement of affairs

The statement of affairs should show the position of the estate at both the date of death and the date of the order. Supporting schedules, such as accounts or a deficiency account may also be required by the official receiver. The statement should include details of disposals of assets, and a receipts and payments account for the period between the date of death and the date of the order.

56.21 Preliminary information questionnaire

It will generally not be necessary for the official receiver to require the completion of a preliminary information questionnaire (PIQ) as many of the questions asked therein relate to information that will be contained in the statement of affairs.

If, having inspected the statement of affairs and other information provided by the personal representative, the official receiver considers completion of the PIQ is necessary, it may be issued to the personal representative. If this is done, the PIQ must be amended so that the questions clearly relate to the affairs of a deceased debtor and not a bankrupt.

In view of the need to deal sympathetically with a relative that is the personal representative of the deceased, it may be more appropriate for any PIQ to be completed at interview, or for matters to instead be dealt with in a narrative statement.

56.22 Interviewing the personal representative

The information contained within the statement of affairs and supplementary information sheet should enable the official receiver to make a decision whether an interview with the personal representative is necessary. In reaching this decision, the official receiver should particularly take account of asset disposals between the date of death and the date of the insolvency administration order, how recent was the death, and of any trading activity by the deceased. Details of disposals may be found in sheets G and H of the statement of affairs (SADI). If the personal representative has not provided the required information by the date requested, they should be invited to attend for interview.

Depending on the complexity of the deceased’s affairs, a narrative statement may be sufficient for the official receiver’s purposes, with a PIQ being used as an aide mémoire.

56.23 Appointment of a trustee

Where there are sufficient assets to attract the appointment of an insolvency practitioner as trustee, the same provisions apply as with bankruptcy cases.

Where a meeting is held, the usual rules and procedures apply except that the proof of debt forms sent out with the notices should bear the date of death as being the date to which claims should be made [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 31, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 18]

56.24 Trustee’s title to assets

The trustee’s title to assets, including life policies, etc., dates back to the date of death of the deceased debtor as if the presentation of the petition, the insolvency administration order and death all occurred on the dame day [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 12]. This date is sometimes known as the ‘deemed date’.

Only assets which form part of the deceased’s estate at the time of death vest in the trustee.

56.25 Extent of the deceased debtor’s estate

An insolvency administration order is made in relation to ‘the insolvent estate of a deceased person’ and the estate, in this context, comprises that property which passes under the deceased person’s will or intestacy [Administration of the Insolvent Estates of Deceased Persons Order 1986 article 2]. Such estate would not include property held on a joint tenancy.

The power to bring proceedings over or in respect of property (see chapter 37) would be property of the estate [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 12(b)].

56.26 Debts in the proceedings

Debts in insolvency administration proceedings are defined as they would be in relation to a bankruptcy [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 36] (see chapter 43) and future and contingent liabilities at the date of the deceased debtor’s death are valued in the same way as in bankruptcy, at the discretion of the trustee [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 23].

The order of payment of debts and costs is also the same as in bankruptcy, with the exception of funeral and testamentary costs being a pre-preferential debt.

56.27 Claim for funeral and testamentary expenses by personal representative

The official receiver, as trustee, must have regard to any claim by the personal representative (or similar) for reasonable funeral, testamentary and administrative expenses incurred¹, provided the estate has sufficient funds in hand.

These claims have priority over the preferential debts [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 20, Insolvency Act 1986 schedule 6] and should be detailed on sheet G of the statement of affairs. Care should be taken by the trustee, that account is taken of such expenses (whether previously notified to them or not) before any distribution is made.

56.28 Assessment of claimed funeral expenses

In assessing what are reasonable funeral expenses, the trustee should have regard for the lifestyle and standing in the community of the debtor. It would, for example, be reasonable to proceed on the basis that the funeral expenses of a person of some standing might be higher than average.

56.29 Assessment of claimed testamentary expenses

Testamentary expenses are the expenses of obtaining probate; this being the exhibiting and proving of the will by the executor in the High Court. The original will is deposited at court and a copy sealed. The court then issues a certificate evidencing that it has been proved. This allows the executor, in the normal course, to administer the will. These functions are often carried out by a solicitor on behalf of the executor.

In assessing a claim for testamentary expenses, the official receiver should ask for a detailed bill of costs, or similar, including time and rate calculations where the stated expenses appear unreasonably high.

56.30 After-acquired property

The official receiver, as trustee, may by notice in writing claim for the benefit of the estate any property which has been acquired by, or devolved upon, the deceased debtor since their death [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 12, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 22]. In practice, these provisions are unlikely to have effect as it is doubtful that a deceased debtor could acquire property.

56.31 Transactions at an undervalue and preferences

The provisions of the Act relating to transactions at an undervalue, transactions defrauding creditors and preferences apply to deceased insolvents [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 26, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 27, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 28, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 36, Inland Revenue Commissioners v Hashmi [2002] BPIR 271]. The relevant date from which to ‘look back’ for actions to recover such transactions would be the date of death, rather than the date of petition [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 10]. So, for example, a transfer to an associate within the period five years before death (rather than petition) might be a transaction at an undervalue if the other criteria were in place.

56.32 Exempt property

The provisions in the Act relating to exempt property (see chapter 24) apply partially in the case of an insolvency administration order [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 12(a)]. In this regard, the official receiver should consider whether clothing, bedding, household equipment, furniture and provisions are necessary for the family of the deceased debtor. Tools of the trade, etc. cannot be treated as exempt property where the debtor is deceased as the provision [Section 283(2)(a)] requires that the equipment is used by them personally to be considered as exempt.

56.33 Enforcement by creditors against the property of the insolvent

In order for a creditor to retain the proceeds resulting from execution or attachment proceedings, or sums paid to avoid such proceedings, the procedure must have been completed prior to the date of the insolvency administration order [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 28].

56.34 Annulment of an insolvency administration order

The court may annul an insolvency administration order where the order should not have been made or when the debts and costs of the proceedings have been paid in full or secured to the satisfaction of the court. Dispositions of assets by the official receiver, as receiver and manager or trustee are valid. Assets vested in the trustee may be vested in the personal representative or, if there is no personal representative, in such person as the court may order [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 11].

Where the annulment is on the grounds of payment in full, any surplus remaining after debts and costs should be returned to the personal representative subject to any parallel EU insolvency proceedings. The court may order that the surplus be paid to a person other than the personal representative [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 1, part II, paragraph 25].

56.35 Discharge

A deceased insolvent does not receive a discharge from the proceedings. The relevant provisions of the Act in relation to discharge are not applied to deceased insolvents.

56.36 Surplus in the proceedings

If there is a surplus after the debts, costs, expenses and interest of the insolvency administration proceedings have been paid in full, the surplus should be paid to the personal representative, subject to any parallel EU insolvency proceedings.

Debtor dying after a bankruptcy petition is presented

56.37 Debtor dying after the presentation of bankruptcy petition – general

The legislation provides that, unless the court orders otherwise, the bankruptcy proceedings against an individual who dies after the petition has been presented will continue as if the individual were still alive, with some necessary modifications [Administration of the Insolvent Estates of Deceased Persons Order 1986 article 5, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 2]. Consequently, the order will be known as a bankruptcy order.

Where the debtor dies before the presentation of the petition the guidance in ‘Debtor dying prior to the presentation of a bankruptcy petition’ (above) should be followed.

56.38 Service of bankruptcy petition

Where the debtor has died after the presentation of the petition but before service, the court may order the petition to be served on the personal representative or other person as the court thinks fit Administration of the Insolvent Estates of Deceased Persons Order 1986 article 5(3).

56.39 Court not aware of debtor’s death after presentation of the petition

Where the bankrupt has died between the presentation of the petition and the date of the bankruptcy order, it is possible that the court were not aware of their death at the time of the making of the order. Where it is apparent that the court was not aware of the bankrupt’s death, notification of the death should be given to the court [Brister v The Official Receiver [2015] Lexis Citation 161].

56.40 Provision of a statement of affairs – general responsibility

Where a bankruptcy order has been made and the debtor has died without first submitting a statement of affairs, the debtor’s personal representative or other person directed by the court is required to submit the statement of affairs in the debtor’s place [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 2, paragraph 1].

Generally, this provision will only apply to cases made on a creditor’s petition as a statement of affairs is supplied with the petition in a case made on a debtor’s petition.

56.41 Provision of a statement of affairs and other information – practicalities

As soon as possible after it becomes apparent that a bankrupt has died without providing a statement of affairs, the official receiver should issue the statement of affairs forms to the personal representative or other person with a covering letter explaining their duty and requesting completion of the forms. The statement of affairs must be submitted within 56 days of the request, or such longer period prescribed by the court or the official receiver [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 2, paragraph 1]. The official receiver should also request sight of the death certificate and a copy of the last will of the deceased bankrupt.

Due to the fact that the personal representative is often a relative or otherwise closely connected to the deceased, the official receiver should phrase letters carefully so as to not cause undue distress on the individual. Depending on the circumstances, an introductory telephone call may be appropriate.

56.42 Preliminary information questionnaire

If, having inspected the statement of affairs and other information provided by the personal representative, the official receiver considers completion of the PIQ is necessary, it may be issued to the personal representative. In view of the need to deal sympathetically with a relative that is the personal representative of the deceased, it may be more appropriate for any PIQ to be completed at interview, or for matters to be dealt with in a narrative statement.

56.43 Interviewing the personal representative

The information contained within the statement of affairs and/or PIQ should enable the official receiver to make a decision whether an interview with the personal representative is necessary. In reaching this decision, the official receiver should particularly take account of any recent trading activity by the deceased.

If the personal representative has not provided the required information by the date requested, they should be invited to attend for interview.

Depending on the complexity of the deceased’s affairs, a narrative statement may be sufficient for the official receiver’s purposes, with a PIQ used during the process of taking the statement as an aide memoir of questions to be asked.

56.44 Extent of the bankruptcy estate

The deceased bankrupt’s estate comprises the same property as that which comprises the bankrupt’s estate at the date the bankruptcy order is made [Section 283, Section 426].

Where a debtor dies after the appointment of a trustee, any will made by the deceased pre-dating the order is invalid as all assets will have vested in the trustee.

56.45 Pension annuity and death benefit

A pension annuity that is being paid to the bankrupt at the time of death may be capable of being claimed under an income payments agreement (see chapter 35) as it would if the debtor were still alive, taking into account the reasonable domestic needs of the debtor’s family.

A death benefit under a pension policy would be excluded from the estate, but might be claimed as after-acquired property, if there were no beneficiary to the policy.

56.46 Life policy

Where the debtor has a life policy that pays out on death it is usually the case that the policy will pay out to a defined beneficiary (the spouse, for example), in which case the bankruptcy estate would have no interest. Where there is no defined beneficiary, the proceeds of the life policy would be payable to the deceased estate, in which the bankruptcy estate has an interest.

Generally speaking, many policies of this type are now sold ‘back’ to the bankrupt. Where this has happened, the funds may only be claimed, from the deceased estate, as after-acquired property (see chapter 36).

56.47 Disposal of property post-petition

Where property has been disposed of (whether by the bankrupt before they died, or some other person after) between the presentation of the petition and the vesting of the estate in the trustee the value of the lost property is recoverable, unless the disposal was with the permission of, or subsequently ratified by, the court, or was for value and without notice of the petition. A transfer of a property interest under the rules of survivorship would not be affected by these restrictions as there is no ‘transfer’ in these circumstances.

56.48 Deceased bankrupt - individual insolvency register

A bankrupt’s death is one of the events that the official receiver is required to include on the individual insolvency register [Rule 11.16, Rule 11.22 and 11.23]. The information contained in the register is drawn from ISCIS, so it is important that the date of death is entered onto ISCIS at the earliest opportunity.

56.49 Claim for funeral and testamentary expenses by personal representative

The trustee, must have regard to any claim by the personal representative (or similar) for reasonable funeral, testamentary and administrative expenses incurred [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 2, paragraph 2], provided the estate has sufficient funds in hand and these claims have priority over the preferential debts [Insolvency Act 1986 schedule 6, Administration of the Insolvent Estates of Deceased Persons Order 1986 article 5(2)]. If the personal representative does not inform the trustee of these expenses before a final dividend is declared, they may declare and distribute a dividend without regard to the claim for the expenses [Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 2, paragraph 1].

56.50 Assessment of claimed funeral expenses

56.51 Assessment of claimed testamentary expenses

In assessing the claim, the official receiver should ask for a detailed bill of costs, or similar, including time and rate calculations where the stated expenses appear unreasonably high.

56.52 Payment of funeral expenses where policy available to cover expenses

In some cases an insurance policy that vests in the trustee, may become payable on the death of the bankrupt. In such a case, the funds would be payable to the estate, but would be subject to a claim by the personal representative.

It is possible that such a policy may pay out some years after the trustee has obtained their release as trustee of the bankrupt’s estate. Nevertheless, the personal representative will still have a claim for funeral expenses against the amount of money received by the official receiver, as trustee ex-officio.

In each case, the official receiver should charge the usual fees and also hold back an amount equal to any debit balance (written-off) on the estate before making a payment to the personal representative.

56.53 Discharge and suspension of discharge

The discharge provisions of the Insolvency Act would apply normally to a debtor who dies after the presentation of the petition [Administration of the Insolvent Estates of Deceased Persons Order 1986 article 5, Administration of the Insolvent Estates of Deceased Persons Order 1986 schedule 2] (see chapter 47).

The provisions relating to suspension of discharge (see guidance on co-operation, non-co-operation etc.) would only apply to the non-cooperation of the bankrupt (before death), and not to any non-cooperation of the personal representative.

56.54 Bankrupt subject to suspension of discharge before death

Where the bankrupt’s discharge from bankruptcy was suspended (see chapter 19) before, or without knowledge of, their death, the official receiver may apply to lift the suspension if the personal representative, or other person, is able to provide information to allow for the conclusion of the administration of the estate.

The debtor’s personal representative

56.55 Personal representative – general

A personal representative is either the executor named in the deceased debtor’s will or, where the debtor died intestate (without a valid will), a person (known as an ‘administrator’) to whom letters of administration have been granted by a court of probate. The duties of an executor/administrator are:

To bury the deceased in a manner suitable to the estate which they leave;
To prove the will of the deceased.

This part contains guidance on identifying and locating the personal representative.

In the absence of a debtor, the personal representative has a number of duties in relation to insolvency administration proceedings. Guidance on these duties is contained within this chapter for debtors deceased before or after the petition

56.56 Identifying the personal representative

The identity of the personal representative may be recorded on the bankruptcy court file. It may be the personal representative who petitioned for the insolvency administration order, or on whom the petition was served by a creditor.

Similarly, the personal representative may contact the official receiver, or the person who notifies the official receiver of the death of a bankrupt may hold the relevant details. It is possible that a relative, or the former solicitors, bankers or accounts of the deceased may be aware of the identity of the personal representative.

If none of the above avenues prove fruitful, the official receiver will have to conduct a search to establish if a grant of representation has been granted.

56.57 Grant of representation

A grant of representation is a document issued by the court which enables the person named within it to deal with the estate of the deceased. There are three types:

Probate – granted to executors (those charged with administering the will) named in a will made by the deceased debtor.
Letter of administration (with will) – granted to someone other than the executor where there is a valid will.
Letter of administration – granted when the deceased did not have a will.

A grant of representation may not be necessary in every case, especially if the estate is small.

56.58 Grant of representation not always necessary

Organisations holding the deceased debtor’s money may release it to the next of kin without seeing a grant, although they may require completion of a statutory declaration instead.

If the whole of the estate is in joint names it passes automatically to the surviving joint owner, but a grant of representation will always be necessary to transfer property in the deceased’s sole name.

56.59 Register of grants of representation

A register of all grants of representation issued throughout England and Wales is kept in the Probate Calendar (http://www.justice.gov.uk/courts/probate/copies-of-grants-wills). There is a calendar for every year from 1858 to date. Every entry includes at least the following details:

The full name and last address of the deceased,
The date of death,
Type of grant issued,
The registry at which the grant was issued,
Date of issue of grant,
The gross value of the estate.

It is possible to search the register to obtain the above details and to establish to whom a grant has been made.

56.60 Carrying out a search of the Register of grants

In order to carry out a search of the register of grants of representation, it is necessary to complete form PA1S http://www.justice.gov.uk/courts/probate/copies-of-grants-wills

A grant cannot be located without, at least, the correct full name of the deceased.

A fee of £10 is payable for a General Search for England and Wales to be carried out, which covers the period from 1958 to the present day. The fee includes one copy of the grant and one copy of the will if there is one.

Full guidance notes on probate search applications are attached to the form PA1S

Dealing with property of a deceased individual

56.61 Dealing with a property of a deceased individual – general

Generally speaking, the process for dealing with a property owned by a deceased individual, whether they died before or after the petition for bankruptcy, will be the same as a ‘normal’ bankruptcy.

There are, though, some differences so far as concerns properties jointly owned by the deceased. This Part particularly gives guidance on those differences.

56.62 Property owned under a joint tenancy – right of survivorship

Many properties, but especially the matrimonial or quasi-matrimonial home, are held on the basis of a joint tenancy. As a result, by virtue of the right of survivorship, a deceased joint-owner’s beneficial share of such joint-tenancy property passes automatically to the surviving joint-owner at the time of death.

56.63 Property owned solely or on the basis of tenants in common

Where the property is held solely by the deceased debtor, or on the basis of a tenancy in common, the rules relating to survivorship will not apply and the bankrupt’s property interest will form part of the insolvency estate, to be realised by the trustee.

56.64 Effect of right of survivorship where debtor dies prior to presentation of petition

Only assets which form part of the deceased debtor’s estate at the date of death will vest in the trustee. At the time of death the interest in any property held on the basis of a joint tenancy passes to the surviving joint-owner, and therefore this interest cannot form part of the insolvent’s estate to be realised by the trustee. There are provisions however to allow the trustee to recover for the estate any value lost by the operation of the right of survivorship.

56.65 Effect of right of survivorship where the debtor dies after the presentation of the petition but before order

Where the debtor dies after the presentation of the petition but before the making of the bankruptcy order, any property held on the basis of a joint tenancy passes to the surviving joint-owner, and therefore this interest cannot form part of the insolvent’s estate on the making of the order to be realised by the trustee [Re Palmer (deceased) (a debtor) [1994] 3 WLR 420].

This leads to the anomalous position that, apart from in relation to unregistered land, there are no provisions for recovery such as there are when the debtor dies before petition, and the provisions for void dispositions will not apply as the accrual by right of survivorship does not count as a disposition for the purpose of the relevant provision [Section 284].

56.66 Effect of right of survivorship where the debtor dies after the making of the order

The right of survivorship cannot apply after the making of a bankruptcy order as an effect of the order is to sever the joint tenancy, with the property then being held on the basis of a tenancy in common, to which the survivorship rules do not apply.

56.67 Recovery of a property interest lost through right of survivorship

Where a property interest has been lost to the estate due to the operation of the rules of survivorship, there is provision to allow for recovery relating thereto [Section 421A] It is important to note that such provision applies only to debtors who die prior to the presentation of a bankruptcy petition (and are therefore subject to an insolvency administration order).

Under these provisions, the trustee can make application to the court to seek to recover the value lost to the estate by the survivorship rules. Value lost to the estate is defined as the amount which would, in the court’s opinion, restore the position to what it would have been if the deceased had been adjudged bankrupt immediately before their death [Section 421A(9)].

56.68 Application for order to recover lost property interest

Where the official receiver, as trustee, is seeking to recover a lost property interest, they will be able to apply to the court for a monetary order against the survivor to pay to the estate an amount not exceeding the value lost to the estate [Section 421A(2)] where:

The petition on which the insolvency administration order was made was presented after 2 April 2001 [Insolvency Act 2000 (Commencement No.1 and Transitional Provisions) Order 2001 article 2],
The petition is presented within five years of the debtor’s death [Section 421A(1)(b)], and
Immediately before their death, the debtor had a beneficial interest in property held under a joint tenancy [Section 421A(1)(c)].

In practice, the Service’s antecedent recovery contractor should normally be appointed.

56.69 Order to recover lost property interest

In making an order to recover a lost property interest, the court will have regard for all the circumstances but, unless the circumstances are exceptional, it must assume that the interests of the creditors outweigh all other considerations [Section 421A(3)]. The court cannot make an order against the property, or against any person who has acquired the property subsequent to the death.

56.70 Unregistered land – debtor dies after presentation of petition

Where a debtor dies after the presentation of the petition and the surviving joint-owner has disposed of the property after the date of the deceased’s death, the legislation [Law of Property (Joint Tenants) Act 1964 section 1(1)] provides that, if the conveyance occurred after the registration of the petition at the Land Charges Department,, any interest the third party has acquired will be subject to the trustee in bankruptcy’s claim.

Where there is a possibility of such a claim, it is likely to be appropriate to seek the appointment of an insolvency practitioner as trustee to take the matter forward.

56.71 Transfer of property prior to death

Where the debtor has transferred a property interest to a third-party prior to death, the right of survivorship would not apply, and the official receiver, as trustee, could seek recovery as a transaction at an undervalue, preference, or a void disposition, as appropriate (see chapter 31).

56.72 Property of a deceased debtor as the family home

Where the debtor dies prior to the presentation of the petition it is to be assumed that the ‘use it or lose it’ provisions of the Act relating to the ‘family home’ will apply as the relevant section [Section 283A] is applied, without modification, to deceased debtors. The official receiver should, therefore, ensure that any relevant property interest is dealt with, in line with the guidance in chapter 28, within three years of the date of death to avoid the interest being lost to the estate.

Where the death was more than three years, or close to three years, before the date of the insolvency administration order the advice of Senior Official Receiver’s Team should be sought.

Where the debtor dies after the presentation of the petition, the ‘use it or lose it (see chapter 28) provisions will apply normally.

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