10 July 2020
Estates - Debts owed by beneficiaries - Rule in Cherry v Boultbee
A company owned and controlled by a residuary beneficiary owes money to a deceased person's estate. Can the executor of the estate take the amount owed from the beneficiary's personal share of the estate without the consent of the beneficiary?
I would expect the beneficiary is entitled by right to their share, and the estate if it wishes can pursue the company for amounts allegedly owed.
If the beneficiary is liable, is there a right of 'set-off'?
Thank you for the question.
Mentor agrees that the beneficiary is entitled to their share and the executor will need to recover the debt from the company unless the beneficiary is personally liable for the company debt. Otherwise, the beneficiary will need to consent to the debt being repaid before the distribution is made.
If the residuary beneficiary is personally liable, then the rule in Cherry v Boultbee [1839] EngR 1099 applies resulting in the beneficiary not being entitled to participate in the distribution of the estate without first repaying the debt.
The beneficiary has no right of set-off.
Regards
Mentor
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