Written by Marie Newton, a paralegal in the Will, Trust and Estate Disputes team
In this day of modern technology and digitalisation, it would be easy to assume that there is no place for an old-fashioned advert in the obituary section of a newspaper announcing the death of a friend, colleague or loved one to the world. However, the point of a Section 27 Notice (the Trustee Act 1925), also known as a ‘statutory advertisement’, is still as relevant now as ever.
All too often friends and relatives are approached to act as executors of a will and with the best of intentions agree to do so without fully understanding the implications. However, there is a significant amount of responsibility that falls to the trustees or personal representatives (PRs) of a will and one of these is ensuring that any debts the deceased has that remain outstanding after their death are discharged.
It is very important that they take these into consideration before distributing the estate to the beneficiaries; because, if they distribute the estate and then still have remaining debts to pay, there is a chance that they will be personally expected to settle them. Many PRs do not realise that even if they instruct a solicitor to deal with the administration of an estate on their behalf, they can still be personally liable if anything goes wrong.
In cases of intestacy, it is perhaps even more important to advertise the death to ensure that all potential beneficiaries have come forward. It’s vital therefore that an executor does not distribute assets to beneficiaries until they are certain that the deceased has no remaining outstanding debts or unknown beneficiaries. But how do you go about obtaining this certainty?
As a PR of an estate, you have a duty to exercise care and skill when administrating an estate under the Trustees Act 2000. A lay PR would be tested less rigorously than a professional executor when it comes to compliance with the Act should anything go wrong and this may offer some comfort. However, lay PRs should still do everything in their powers to ensure the proper administration of an estate. Further security can be therefore be obtained by placing a Section 27 Notice.
A Section 27 Notice enables PRs to protect themselves from liability against any claims from creditors and/or beneficiaries that they are not aware of at the time that they convey or distribute the property in question, provided that the notice placed is compliant with the Section 27 requirements. The notice, placed in the Gazette and a local newspaper (where the property is) should set out a period of at least two months for any interested person to send the particulars of their claim to the PRs. Nowadays the notices are placed digitally in addition to old school print and afford the same protection. Though it is not a legal requirement, any trustee or personal representative placing a notice in accordance with Section 27 will not be liable to any such creditors or beneficiaries who come forward after this deadline. This can give the PRs and beneficiaries peace of mind that – as far as is reasonably possible – all enquiries have been made to try and pay everything that needs to be paid. The fee is generally around £200, although this may vary from region to region depending on the local newspaper.
A Section 27 Notice doesn’t prevent claims being made against the estate, however, it means that if a creditor does come forward after the expiry of the statutory period, recovery will be sought from the beneficiaries rather than the PRs. It is also important to note that Section 27 Notices do not prevent any claims being made against the estate under the Inheritance (Provision for Family and Dependants) Act 1975.
All told it would seem that this old-fashioned notion seems as relevant and useful as ever and the peace of mind would definitely appear to be worth the minimal outlay, which would ultimately be recoverable from the estate in any event.