International Bankruptcy Searches

As we are of course all aware it is standard practice to undertake bankruptcy searches against beneficiaries beofre distribution of their legacy or share. If they are situated within the UK then it is quite straightforward and inexpensive. however it is becoming more and more the case that beneficiaries are resident in other jurisdictions.

Invariably this means that we need to approach specialist agencies to undertake these on our behalf. Their fees vary dramatically depending upon the relevant jurisdiction.

I have been giving thought as to where these costs should be borne- whilst a legitimate administration expense offering some protection to the Personal Representative- should these costs be set as an estate administration or against the relevant beneficiaries share.
I wonder what members views are as to who should bear these costs

I see no reason to treat the costs of a bankruptcy search differently depending on where the beneficiary in question is living.

Where a dispute over a will arises, if the issue arises due to the testator the costs will usually fall upon the estate. When considering the question now raised – in most cases the testator will know where the beneficiary lives so a similar principle should apply as the costs in question arise due to the testator’s actions.

Looking at it another way if, say, the testator wants to giver £1,000 to each of their grandchildren, why should one receive less than the others just because they live outside the UK?

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

The position does seem a little unclear and without a definitive answer. The 19th century authority, (Sharp v Lush (1879) 10 Ch D 468) holds that the estate should pay ‘expenses incident to the proper performance of the duty of an executor’ and goes on to say that the proper performance of this duty was ‘ascertaining the debts and liabilities due from the testator’s estate, the payment of such debts and liabilities, and the legal and proper distribution of the estate among the persons entitled’. Arguably, this last duty cannot be conducted without undertaking bankruptcy searches.

Out of the 100’s of overseas bankruptcy searches we conduct for clients each year, and across various jurisdictions, we see that the vast majority of these are classed as an estate expense.

Philip Turvey