Death does not release an individual from their debts and liabilities, nor does it allow transactions made to loved ones to escape challenge. This is so regardless of whether the transactions were made with the intention to defraud creditors.

Insolvency administration orders (IAOs)

Disputes between directors often arise because of, and/or result in, disputes about company money. Directors need to be alert to how they are required to act, particularly in times of conflict. Section 172 of the Companies Act 2006 imposes a broad duty on directors to promote the success of the company however the term “success” is unhelpfully uncertain, especially where the company is in difficulty and/or where the company is wound up.

When someone dies, it is not always clear whether or not their estate is insolvent. It can take time, particularly with complex estates, for assets and liabilities to be identified and claims by creditors to be brought. Personal representatives (“PRs”) and their advisors need to be alive to the prospect of an estate being insolvent and take action swiftly to ensure their financial exposure is minimised and consider how best to administer the estate for the benefit of estate creditors rather than beneficiaries.