Farra is a death administration assistant for UK families. Get step-by-step guidance for registering a death, applying for probate, notifying banks, and managing bereavement admin. From essential documents to practical checklists, Farra simplifies estate paperwork and funeral-related tasks so you can focus on what matters.
An executor can be personally liable — from their own assets — in several situations: distributing the estate before all known debts are paid, distributing without first advertising for creditors (the section 27 notice), making incorrect or premature distributions, and overlooking a creditor who later makes a valid claim. These risks can be substantially reduced by following the correct procedures before making any distribution.
Being appointed executor comes with real legal responsibility. An executor’s own assets are at risk if the estate is mismanaged, and there is no limited liability standing between the two. Understanding where the risks lie — and what steps protect you — matters most before you begin distributing.
The fundamental rule of estate administration is that debts must be paid before any distribution to beneficiaries. If an executor distributes estate assets to beneficiaries and there are insufficient funds remaining to pay a creditor, the executor is personally liable to that creditor for the shortfall.
This applies to all known debts: the mortgage, any unsecured loans, credit card balances, utility bills outstanding at the date of death, outstanding income tax, and — critically — any tax that falls due during the administration period.
Which rules apply depends entirely on whether the estate is solvent, and the two regimes are commonly run together into a single “order of priority” that does not exist. Work out solvency first.
If the estate is solvent — that is, the assets are enough to pay all the debts, expenses and liabilities in full — there is no ranking of creditors at all. Everybody gets paid. Section 34(3) of the Administration of Estates Act 1925 and Part II of its First Schedule set out something different: an order in which the assets of the estate are applied towards paying those debts. It runs from undisposed-of property, through residue, property set aside or charged for the payment of debts, the fund retained for pecuniary legacies, then specifically gifted property rateably by value, and finally property appointed under a general power. Its practical effect is to decide which beneficiaries bear the cost of the debts, not which creditors are paid first. The will may vary that order.
If the estate is insolvent, the Administration of Insolvent Estates of Deceased Persons Order 1986 applies bankruptcy law to the respective rights of secured and unsecured creditors, to what debts are provable and to the priority of debts. Article 4 makes reasonable funeral, testamentary and administration expenses rank ahead of the preferential debts; after that the bankruptcy hierarchy applies.
In both cases, a secured creditor sits outside the ranking. A mortgagee looks to its security first and only ranks with the unsecured creditors for any shortfall — it is not a “first-priority debt” that has to be paid out of the general estate ahead of everyone else.
Paying a beneficiary before all debts are covered is a breach of duty — historically called a devastavit — for which the executor is answerable personally, to the extent of what they distributed. It is not a criminal offence.
Even if you have paid every debt you know about, there may be creditors you are unaware of — a forgotten loan, a disputed invoice, a tax underpayment that only comes to light later. If such a creditor makes a claim after you have distributed the estate, you could face personal liability.
Section 27 of the Trustee Act 1925 provides a statutory protection. The executor gives notice of an intention to distribute “in the Gazette, and in a newspaper circulating in the district in which the land is situated”, plus any other notices a court would have directed, requiring anyone interested to send in particulars of their claim within a stated period of not less than two months. The newspaper notice is part of the statutory requirement where the estate includes land, not an optional extra.
After the response period expires and provided you have paid all creditors who responded, you can distribute the estate without personal liability to any creditor who failed to come forward, even if their claim is later discovered to be valid.
The protection is against claims the executor did not have notice of. It does not protect you against creditors you already know about: section 27 lets you distribute “having regard only to the claims of which the trustees or personal representatives then had notice”, so you must still pay everyone you are aware of. Nor does it defeat a beneficiary’s right to follow the property into the hands of anyone who received it other than as a purchaser. The Gazette publishes its own price list: a deceased estates notice submitted by webform, XML or Gazette template is £96.55 plus VAT at the time of writing, and it can be placed at thegazette.co.uk.
One thing section 27 does not cover is a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Section 4 of that Act sets a six-month window from the date of the grant, and section 20 protects a personal representative who distributes after those six months have passed. Distributing inside the window, where such a claim is a realistic prospect, is a separate risk.
Do not skip the section 27 notice
Some executors skip the section 27 notice in straightforward estates. Without it, there is no statutory protection against a claim the executor did not know about, and the liability that follows falls on the executor personally rather than on the distributed estate. The two-month minimum period also runs alongside the work of collecting in the assets, so in most administrations it costs no time at all.
There can be legitimate reasons for making interim distributions before the estate is fully wound up — for example, giving a beneficiary an advance against their eventual share while asset sales are pending. However, these interim distributions carry risks.
Best practice is to obtain a written receipt from the beneficiary acknowledging the interim nature of the payment and that they may be required to repay part of it if the eventual estate accounts show that less is available than anticipated. This receipt protects the executor if the estate proves to have been overvalued or if unexpected debts or liabilities arise.
Be particularly cautious about interim distributions if there are ongoing disputes (such as a claim under the Inheritance (Provision for Family and Dependants) Act 1975), a pending HMRC query, or assets whose value is uncertain. Making premature distributions in these circumstances can expose you personally if the claim or liability crystallises at a larger amount than anticipated.
Where a beneficiary cannot be located, or where their entitlement is genuinely uncertain (for example, because of a dispute about the validity of the will), an executor has the option of paying their share into court under section 63 of the Trustee Act 1925.
Paying into court has two effects: it relieves the executor of personal liability for that share, and it protects the beneficiary’s entitlement so that they can claim the money from the court when they are found or the dispute is resolved. The procedure is in Practice Direction 37. The trustee files a witness statement — describing the trust, naming the people interested in the money and their addresses, and undertaking to answer the court’s enquiries — at Chancery Chambers at the Royal Courts of Justice, a Chancery district registry, or the county court hearing centre where the case is proceeding. The money itself is lodged with the Court Funds Office, and everyone interested must be told promptly that it has been paid in.
This procedure is used less commonly in practice (missing beneficiary insurance is often a more practical alternative — see our guide on missing beneficiaries), but it is a genuine option where the executor needs absolute certainty that they have discharged their obligations before distributing the remainder of the estate.
You can instruct a solicitor to administer the estate. You remain the executor and the legal responsibility stays with you; the solicitor acts as your agent, and if they are negligent you have a claim against them backed by their professional indemnity insurance. That is a route to recovering a loss, not an escape from liability for it.
“Executor’s bond” and “administration bond” are terms worth being careful with. The administration bond no longer exists in England and Wales. Section 120 of the Senior Courts Act 1981 replaced it with a power for the High Court, as a condition of granting administration, to require sureties to guarantee that they will make good any loss caused by a breach of the administrator’s duties — and that section applies to administrators, not to executors. No court will require an executor to give one, and no executor can obtain one.
What is sold commercially is estate administration indemnity insurance, taken out by the executor or the estate to cover defined risks such as a missing beneficiary or an unknown creditor. Cover and price vary between insurers and no official body publishes either. These are worth understanding if:
The costs of professional administration and insurance are legitimate expenses of the estate and can be paid from estate funds. They are not a personal cost to the executor.
This guide describes the law of England and Wales. Scotland administers estates under a grant of confirmation, distinguishes executors-nominate from executors-dative, and still requires a bond of caution from most executors-dative; Northern Ireland has its own rules again.
Sources
Related guides