Creditors and Trustee Act Notices

As a personal representative (Executor or Administrator), you have many responsibilities, one such being handling any claims that are made against the deceased’s estate. It can often be the case that during the administration of the deceased’s estate you are unable to identify and contact the deceased’s creditors and/or beneficiaries. This leaves you and any other personal representative of the deceased exposed to potential claims against the estate. If you have already distributed the estate and a creditor comes forward, such as a utility provider, they may be able to seek payment from yourself and your fellow executors.

Establishing the deceased’s credit history and any possible debts owed by the deceased can be a challenge. There are quite obvious creditors that you may already have thought of contacting, such as the deceased’s bank, mortgage lender, and utility companies, but there can be more obscure creditors you may have not have thought of. The deceased may have had credit agreements for household items such as furniture, for example. These creditors are entitled to claim back their debt from the deceased’s estate.

Shielding against liability

To alleviate this risk, it is advisable to publish a notice about the deceased’s estate in The Gazette, which is accepted to be the UK’s official record, as well as any local papers where the deceased owned property.

This is referred to as a statutory advertisement which was established under Section 27 of the Trustee Act 1925, colloquially known as a Section 27 notice. This notice safeguards the personal representative from personal liability for any unknown debts the deceased may have had, as it proves they have attempted to reach the creditors through a public notice.

The purpose of a Section 27 notice is to inform any likely creditors that the deceased has passed, and their estates are soon to be distributed. This then gives the likely creditors two months to make a claim against the estate for any outstanding debts the deceased owed. Once the two-month period has expired, the personal representatives are no longer liable for any future claims against their estate. Therefore, you should consider a Section 27 notice as a shield against liability.

Creditors can still make claims against the deceased’s estate for any debts owed to them, but it will be the beneficiaries of the estate who will be liable to settle this. This is important to note, as oftentimes the beneficiaries will also be appointed personal representatives.

Placing a Section 27 notice

A Section 27 notice is often placed by a legal professional such as a solicitor here at Kew Law, however it is possible for any personal representative to place one themselves. In order to file a Section 27 notice, it is necessary to have the Grant of Representation or at the very least the deceased’s death certificate. It is then just a matter of contacting The Gazette and the local paper of any county that the deceased owned property. If you need any guidance through this process, Kew Law is here to help.

If a Section 27 notice has been published and the two-month period has passed without a creditor coming forward, the personal representatives can proceed with the estate’s distribution. If, however, a creditor does come forward within the two-month period, this debt must be settled, or the personal representatives may still be liable.

As previously stated above, if a creditor comes forward after the estate has been distributed, they are still entitled to claim back the debt owed. Therefore, it is crucial as the deceased’s personal representatives that you can adequately show you have attempted to settle these debts. This can be proven by evidencing your investigations into any potential creditors and the publication of a Section 27 notice. If this can be demonstrated, the personal representatives will not be personally liable for any of the deceased’s debts.

Frequently Asked Questions

What is a Section 27 notice?

A Section 27 notice is a statutory advertisement placed under the Trustee Act 1925 to alert creditors and beneficiaries of a person’s death and give them an opportunity to make claims against the estate.

Why is a Section 27 notice important for executors?

It helps protect executors and administrators from personal liability by demonstrating they have taken reasonable steps to identify creditors before distributing the estate.

Where should a Section 27 notice be published?

Typically, it is published in The Gazette (the UK’s official public record) and in a local newspaper relevant to where the deceased lived or owned property.

How long do creditors have to make a claim?

Creditors usually have two months from the date of publication to come forward and submit any claims against the estate.

What happens if a creditor comes forward after the two‑month period?

They may still pursue the debt, but liability generally shifts to the beneficiaries rather than the personal representatives, provided the notice was correctly issued.

Examples

Example A

Unknown utility debt after distribution

An executor distributes the estate to beneficiaries, believing all debts have been settled. Months later, an energy provider contacts them regarding an outstanding bill. Because no Section 27 notice was placed, the executor may be personally liable for repaying the debt.

Example B

Missing beneficiary comes forward

An estranged relative, not identified during estate administration, later claims they are entitled to a share of the estate. A properly placed Section 27 notice would help demonstrate reasonable efforts were made to locate beneficiaries.