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Duties and powers of personal representatives — SQE1 Wills question

A worked single-best-answer question on duties and powers of personal representatives, with why each wrong option is wrong — the way SQE1 traps candidates.

Duties and powers of personal representatives

Ingrid's will leaves her flat to her son, Jon, and her residuary estate to her daughter, Kim. The will also directs her executors 'to pay all my debts out of my residuary estate'. At Ingrid's death the flat is worth £250,000 and is subject to a mortgage of £90,000. The residuary estate is more than sufficient to pay all debts.

Who bears the mortgage debt?

  1. AKim, because the will directs that all debts be paid out of residue.
  2. BKim, because secured debts are always paid out of residue before specific gifts are distributed.
  3. CJon, because the flat passes subject to the mortgage and a general direction to pay debts out of residue is not a sufficient contrary intention.
  4. DJon and Kim equally, because a secured debt is apportioned between specific and residuary beneficiaries.
  5. EThe lender, who must first seek repayment from residue and may look to the flat only if residue is insufficient.
Show answer and reasoning
C is the best answer. Under s 35(1) Administration of Estates Act 1925, property charged with a debt bears that debt as between the beneficiaries, unless the testator shows a contrary intention. Section 35(2) provides that a general direction to pay debts out of residue is not enough; the will must refer expressly or by necessary implication to the charged debt. Jon therefore takes the flat subject to the mortgage.

Rule: Property charged with a debt (such as a mortgage) bears that debt as between beneficiaries unless the will shows a contrary intention, and a general direction to pay debts from residue is not sufficient.

  • A Under s 35(2) a general direction to pay debts out of residue does not displace s 35(1). (wrong rule)
  • B The default rule is the opposite: property charged with a debt bears that debt. (wrong rule)
  • D There is no apportionment rule; the charged property bears the whole debt. (wrong rule)
  • E Section 35 regulates incidence between beneficiaries; it does not dictate how the lender enforces its security. (answers a different question)

Source: Administration of Estates Act 1925, s 35

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