19 - solvent distribution of estate

1
Solvent Estate Introduction Solvent Estate - where assets exceed liabilities and there is a surplus which can be distributed among beneficiaries There is an order of priority in which assets must be used to pay funeral and testamentary expenses, and administration expenses, debts and liabilities Order of Priority In the absence of contary intention in the Will - there is an order of priority for payment of debts and liabilities [Contrary intention will override the order] Because there is no statutory provision in Jamaica - we use the pre-1926 rules Note - General Legacies are used to pay debts first befor specific legacies Note - personalty are used first before realty Unless realty is charged with payment OR personalty is exonerated from payment by T If surplus left from a fund after paying creditors, it will be deivised among beneficiaries entitled to that fund Order General or Residuary Personalty*** not specifically beqeauthed or exonerated or exempted [any item not given away or reserved specifically will be used first, Not realty] [General personalty -what left after specific and general pecuniary legacies have been taken out - have to take out money gifts first] Real Estate Appropriated to or devised in trust for payment of debts [any real estate which is given to pay debts] Real Estate descended whether acquired before or after the making of the will Real estates devised, charged with the payment of debts When property is devised with a mortgage charge or balance on it, the beneficiary or mortgagee is responsible to realize the assets/security, pay off the charge or balance owing on the property and the balance left is used in appplying to pay off debts and liabilities Section 13 Intestate Estate and Property Charges Act General pecuinary legacies pro rata Pecuniary Legacies are paid out of residuary personalty unless contrary intention in the will [e.g. gift to A for 50,000 will be paid out of residuary personalty ] Specific and residuary devises and specific legacies pro rata Real and personal property which T had power to appoint and which he had appointed by will Marshalling Marshalling allows disappointed beneficiary (whose intended gift has been used to pay creditor) to go after property which ought to have been used to pay the debts before resorting to his property

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Distribution of Estate in Jamaica

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  • Solv

    ent E

    sta

    te

    Intro

    duct

    ion

    Solv

    ent

    Esta

    te -

    where

    asse

    ts e

    xcee

    d l

    iab

    ilities

    an

    d t

    he

    re is a

    su

    rplu

    s w

    hic

    h c

    an b

    e

    dis

    trib

    ute

    d a

    mon

    g b

    en

    eficia

    ries

    Th

    ere

    is a

    n o

    rde

    rof

    priori

    ty in w

    hic

    h a

    sse

    tsm

    ust be

    used

    to p

    ay fu

    ne

    ral and

    test

    am

    enta

    ry ex

    pen

    ses,

    a

    nd

    adm

    inis

    tratio

    n ex

    pense

    s, de

    bts

    an

    d l

    iabili

    ties

    Ord

    er

    of

    Pri

    ori

    tyIn

    the a

    bse

    nce o

    fco

    nta

    ry in

    ten

    tion

    in

    th

    e W

    ill -

    th

    ere

    is

    an

    ord

    er

    of

    pri

    ori

    ty f

    or

    paym

    en

    t of

    de

    bts

    and

    lia

    bili

    ties

    [Con

    trary

    inte

    ntion

    will

    overr

    ide

    the

    ord

    er]

    Beca

    use th

    ere

    is n

    osta

    tuto

    ry p

    rovis

    ion

    in

    Ja

    ma

    ica

    - w

    e u

    se

    the

    pre-

    1926

    ru

    les

    No

    te -

    Gene

    ral L

    eg

    acie

    s a

    reused

    to p

    ay d

    ebts

    first

    be

    for

    spe

    cific

    leg

    acie

    s

    Note

    - p

    ers

    on

    alty a

    re

    used

    fir

    st

    be

    fore

    rea

    lty

    Unle

    ss r

    ea

    lty is c

    harg

    ed

    with

    pa

    ym

    en

    t O

    R p

    ers

    on

    alty is

    exon

    era

    ted

    fro

    m p

    aym

    ent

    by T

    If s

    urp

    lus le

    ft fro

    m a

    fun

    daft

    er

    payin

    g c

    red

    ito

    rs,

    it w

    illbe

    de

    ivis

    ed a

    mo

    ng

    be

    ne

    ficia

    ries

    entit

    led

    to tha

    t fu

    nd

    Ord

    er

    Gene

    ral

    or

    Re

    sid

    uary

    P

    ers

    ona

    lty**

    * n

    ot

    spe

    cific

    ally

    be

    qe

    au

    the

    d o

    r e

    xon

    era

    ted

    or

    exe

    mp

    ted

    [any ite

    m n

    ot giv

    en

    aw

    ay o

    r re

    se

    rve

    d s

    pecific

    ally

    will

    be

    use

    d f

    irst,

    Not

    realty]

    [Gen

    era

    l pe

    rso

    na

    lty -

    wh

    at le

    ftaft

    er

    sp

    ecific

    an

    d g

    ene

    ral

    pe

    cu

    nia

    ry leg

    acie

    s h

    ave

    bee

    nta

    ken

    out

    - ha

    ve

    to

    take

    out

    mone

    y g

    ifts

    fir

    st]

    Real E

    sta

    te A

    ppro

    pria

    ted t

    oor

    devis

    ed in

    tru

    st fo

    r p

    aym

    ent

    of d

    ebts

    [any r

    ea

    l esta

    te w

    hic

    h is

    giv

    en

    to

    pa

    y d

    ebts

    ]

    Real E

    sta

    te d

    esce

    nd

    ed

    wheth

    er

    acq

    uire

    d b

    efo

    reor

    afte

    r th

    e m

    akin

    g o

    fth

    e w

    illR

    eal

    esta

    tes d

    evis

    ed

    , ch

    arg

    ed

    with

    the

    paym

    ent

    of d

    ebts

    Wh

    en p

    rop

    ert

    y is d

    evis

    ed

    with a

    mo

    rtga

    ge c

    harg

    e o

    rba

    lance o

    n it, th

    e b

    eneficia

    ryor

    mort

    gage

    e is r

    espon

    sib

    leto

    realiz

    e th

    e a

    ssets

    /se

    curity

    ,pa

    y o

    ff t

    he c

    harg

    e o

    r ba

    lance o

    win

    g o

    n the

    pro

    pe

    rty

    an

    d t

    he

    bala

    nce

    left is u

    sed

    in

    app

    ply

    ing t

    o p

    ay o

    ffde

    bts

    an

    d lia

    bili

    ties

    Sect

    ion

    13

    Inte

    sta

    te Es

    tate

    a

    nd

    Pro

    pe

    rty C

    harg

    es A

    ct

    Gene

    ral p

    ecuin

    ary

    le

    ga

    cie

    spr

    o ra

    taP

    ecun

    iary

    Le

    gacie

    s a

    re p

    aid

    ou

    t of re

    sid

    ua

    ry p

    ers

    ona

    lty

    un

    less c

    on

    trary

    inte

    ntio

    n

    in t

    he w

    ill[e

    .g.

    gift

    to A

    for

    50,0

    00 w

    illbe

    paid

    ou

    t of re

    sid

    uary

    pers

    onal

    ty ]

    Specific

    and

    resid

    ua

    ryde

    vis

    es a

    nd s

    pe

    cific

    lega

    cies

    pr

    o ra

    taR

    eal and

    pe

    rso

    na

    l pro

    pe

    rty

    whic

    h T

    had

    pow

    er

    to a

    ppo

    int

    an

    d w

    hic

    h h

    e h

    ad a

    pp

    oin

    ted

    by

    will

    Ma

    rsha

    lling

    Mars

    halli

    ng

    allo

    ws d

    isa

    ppo

    inte

    dbe

    ne

    ficia

    ry (

    who

    se i

    nte

    nd

    ed

    gift has b

    ee

    n u

    se

    d to

    pay

    cre

    ditor)

    to

    go a

    fte

    r p

    ropert

    yw

    hic

    h o

    ug

    ht

    to h

    ave

    been

    use

    d

    to p

    ay the

    deb

    ts b

    efo

    re r

    eso

    rtin

    gto

    his

    pro

    pe

    rty