Can a deceased estate divert an inheritance to bypass a bankrupt person?

Long story short.
A large inheritance was provided to a non contactable family member who has a history of multiple bankruptcy.
She has requested her inheritance be distributed to her children rather than herself so that creditors cannot chase her for the money she would inherit.
Is this legal for the executor to decide to divert the inheritance at the request of a beneficiary?
Please not that the children who will now inherit all her inheritance money were never listed in the will.
The executor is a general legal firm.
Any ballpark advice on whether this is legal for the executor to do would be appreciated.

 

I would not think so as if she is an undischarged bankrupt, the inheritance would becom ethe property of her trustee in bankruptcy

 

Generally, she can accept or reject the inheritance, not divert it. If she rejects it, it would go back to the estate and be distributed to the other beneficiaries. You could the gift the money to her children, but would rely on your goodwill to do so. And may be given a dim view by any bankruptcy proceedings underway.

What advice is the law firm giving you?

 

Do you know how you would be able to find out if they an undoscharged bankrupt?

 

We sought legal advice on contesting the will but we were effectively told that its means tested based purely on financial status - not fairness. So contesting someone with zero money and piles of debt was likely to work against us. So once we recieved that legal advice for two separate solicitors, we had no choice but to not pursue it.
But now the final distribution of the estate details have come out with executor saying they are redistributing the money to 4 children of the listed beneficiary. I'm happy to go get legal advice again but wanted a ballpark idea of whether what was happening was legal or standard practice.

 

@Terry_w @thatbum ?

 

The proceeds can be diverted if all beneficiaries agree in writing to do so.

 

Thanks, we didn't do that so can I safely assume they are meant to ask permission? Or was sending the final dispersion summary their method of asking permission? I emailed back saying I wasn't happy with several items so I also have time up sleeve to make other queries

 

There is case law on this.

Assuming the death has occured.

When a person is bankrupt a trustee in bankruptcy (TIB) steps in their shoes. It would only be the TIB that has the power to reject the gift.

If the executor diverts the money to others the executor will be personally liable for the loss the TIB has incurred and can be personally sued.

 

Case law for this is Official Trustee in Bankruptcy v Schultz (1990)

 

The executor would normally do a bankruptcy search to check this before distributing the estate (to protect themselves).

 

Would this check appear in an itemized account as a billable item? Because I suspect they have not done this and my queries a few days ago questioning the redistribution have not been answered yet. I suspect the word bankruptcy in my email has raised some red flags internally for them?

 

It would be a disbursement and the lawyers would probably be passing it on to the executor.

 

You might have to sue the executor. Sounds like they have breached their duties and have not followed the will.

 

Thank you terry. I had asked for an itemized account early this week to justify a 30k legal bill for the estate and have not recieved a response yet. My email also raised queries on why the estate was dispersing inheritance to bypass a bankrupt person. I may have inadvertently created some ass covering at the legal firm.
Any suggestions / options for how I could leverage off this misconduct to divert inheritance away from the bankrupt person and to my mother who cared for the diseased for the last 10yrs?

 

I assume that the person is deceased not diseased .

 

I don't really understand your endgame here. Why do you care if the money goes to the bankruptcy creditors, or some random family member's kids?

If you think your mum should have gotten more under the will, then that's a completely separate issue. Maybe she should have challenged it herself?

 

which jurisdiction is this?

 

Thatbum makes a good point. If the executor has changed the distribution making other beneficiaries take an increased share of the bankrupt then, assuming your mother is one of these beneficiaries, proving the executor wrong will mean the shares are reduced only to benefit the creditors of the bankrupt.

 

Sadly the extended family is a mess of bankrupts, drug addicts and general drop kicks grabbing for money after convincing an old lady to change her will in the months before her death.
So effectively I'd rather the inheritance paid off their personal debts to people they owe money rather than go to the family members themselves. Their motives for transferring inheritance is purely to avoid paying back their debts to people and businesses they screwed over and to avoid inheriting enough money that they won't need a government pension anymore. They don't deserve to have it.
Unfortunately you can't choose your family.