Our Practice Advice Service answers some commonly asked questions by private client practitioners
I am a junior lawyer acting in the administration of a high value estate with four beneficiaries due to receive £500,000 each. Despite receiving clear bankruptcy searches, the executor has now informed me that one of the beneficiaries may be in an individual voluntary arrangement (IVA). Can I proceed with distribution to this beneficiary?
You will need to make enquiries of the beneficiary or do a search of the insolvency register to ascertain details of any particular IVA before a decision can be made about the correct person to whom a payment can be made.
In an IVA case in which a bankruptcy petition has been presented and a bankruptcy order made, sections 306 and 307 of the Insolvency Act 1986 apply and the personal representatives remain at risk if they make payment to the wrong party.
For IVA cases in which no bankruptcy petition has been presented, or in which a petition has been presented but has been dismissed at the time when the distribution is made, the existence of the IVA will not affect the beneficiary’s right to receive the payment and give a good receipt.
For more information please see the Law Society’s Wills and Inheritance Protocol and practice note on bankrupt beneficiaries.
Disclaimer
While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such.
The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.
This article is compiled by the Law Society’s Practice Advice Service. Comments relating to the questions should be sent to practiceadvice@lawsociety.org.uk
