Someone Owes Me Money and They’ve Died
If you are owed money by someone and they die, what should you do?
Well, rest assured that the debt doesn’t disappear. All debts need to be paid from the residue of the estate before the residue is distributed.
To get paid, the estate needs to know that you are owed money. If they don’t know, and you don’t give them notice, you can miss out altogether.
An executor will usually advertise in the Government Gazette, a national paper and a local paper for all creditors to come forward within 3 months, or they will not be liable to pay them.
So, your first job is to find out who the executor of the estate is, and put them on notice of the amount of money owed to you and the reason it is owed. You can find out who the executor is by monitoring the Victorian probate applications website, where everything is advertised and published.
If the estate is insolvent, then you will be in a line with all other unsecured creditors. The funeral expenses and expenses of the estate get paid first, then any money owed to the government, like tax, gets paid. Then all secured creditors get paid, and if there’s anything left over, you will get a portion.
The problem with insolvent estates is that the executor might not want to administer the estate. They are not obliged too, so you will have a lot of difficulty finding out about the estate if probate is not sought.
There are a couple of remaining options for you in this case. You could force the executor to administer by applying to the Supreme Court. If the executor still refuses, you could seek to administer the estate yourself, as a creditor. You would be under the same obligations as the executor to pay the debts in order, and you wouldn’t get first preference just because you were in charge.
The final option is to apply for a petition under the Bankruptcy Act for the estate to be administered as bankrupt. A trustee in bankruptcy would be appointed. The best thing about this option is that the funeral and executor’s expenses don’t take priority, and nor does government debts. So you are more likely to get some money back this way.
