Succession Act 1965 Schedule 1

Rules as to application of assets

Schedule 1 sets out the rules for how a deceased person's estate assets are to be applied to pay debts, both where the estate is insolvent and where it is solvent, and the priority order in which different categories of assets are used.

• Where the estate is insolvent, funeral, testamentary and administration expenses take first priority, and thereafter the same rules apply as in bankruptcy proceedings, with the date of death substituted for the date of adjudication in bankruptcy.
• Where the estate is solvent, debts are paid from assets in a specific order of priority, starting with property not disposed of by will, then residuary gifts, then property specifically set aside for debt payment, and so on down to specifically bequeathed property and property appointed under a general power.
• A fund must be retained from the earliest categories of assets to cover any pecuniary (cash) legacies before those assets are applied to debts; that retained fund itself ranks fifth in the order of liability.
• The testator may vary the order of application of assets by the terms of their will, and the rules apply only as between beneficiaries — creditors and spouses entitled to a legal right are not affected by the ordering.

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