Stiffing the Undertaker

There is a common meme on the internet that your debts die with you. Apparently – for some people – it is the height of their ambition to spend everything they can during their lifetime, and then have their final cheque to their funeral director bounce for lack of funds.

Some people REALLY want to believe that their debts do not have to be paid out of their deceased estate, and talk about it as if it is an eternal truth.

Sadly for them, it is not true and never has been. It is one of the many furphies that abound on the interweb about this area of law. (Another is that there is a magic amount of money – typically said to be $10,000 – that you can leave to someone in your Will to prevent them from making a claim against your estate after you die. Yet another is that you can rely upon a ‘no-contest’ clause in your Will ala Frank Sinatra to prevent anyone contesting your Will.)

None of these things have ever been true or valid in Australia – but it doesn’t stop people online from repeating them. After all, why let the truth stand in the way of a good story?

So … we have prepared this brief article as a warning for South Australian Executors about paying estate debts and liabilities.

When someone dies, their debts and liabilities do NOT die with them. One of the basic duties of an executor is to ensure that the estate debts are paid – in the correct order – before any distribution is made to beneficiaries. In other words, not only must estate debts be paid, they are paid in priority to your beneficiaries receiving dollar one.

In South Australia, section 83 of the Succession Act 1936 (SA) (the Act) prescribes the default order in which a deceased person’s assets must be applied to pay these debts.

This section provides an itemised sequence for how assets should be sold or used to meet the debts, liabilities, funeral expenses, and costs of administering the estate.

This statutory formula aims to protect the deceased’s intentions, preserve specific gifts where possible, and provide consistency in the administration of estates. Executors must follow this order unless otherwise directed by the Will. It’s crucial that executors understand and follow this order to avoid legal issues or personal liability.

The Will may override the default order 

It’s important to note that section 83 is subject to any express directions made by the deceased in their Will. A Testator (Will-maker) can specify a different order of application or direct that certain assets be used to pay debts and estate expenses. For example, a testator might leave instructions that a life insurance payout should be used to cover funeral costs and debts, preserving other assets for specific beneficiaries.

Executors should carefully read the Will and seek legal advice where needed to determine whether the Statutory order applies, or whether the deceased has chosen a different approach.

We can guide you through your duties as executor and help you avoid costly mistakes. Go to our website www.genders.com.au for clear, practical advice.

Advice for Executors 

As an executor, you have a fiduciary duty to administer the estate properly. Understanding your responsibilities – including under section 83 of the Act among many other duties – is an essential part of that role. Always:

• Check the Will for specific directions about how debts and expenses should be paid.
• Follow the Statutory order where no contrary instructions are given.
• Seek professional advice if you’re unsure, as errors in this area can be costly, and your personal assets (as the executor who gets it wrong) can be exposed to potential liability.

We’re Here to Help 

Genders and Partners are the oldest law firm in South Australia (established 1848). We specialise only in Trusts, Wills and Estates. Our experienced team regularly assist executors in navigating the complex process of probate and estate administration. Whether you need guidance interpreting a Will, understanding your legal obligations, or ensuring debts are properly paid in the correct order, we’re here to support you every step of the way. If you’re an executor and have a question about your duties, go to our website www.genders.com.au for clear, practical advice and to book a FREE 15 minute telephone consultation with one of our trusted advisers.

If you would like further advice about administering an estate, or if you are concerned an Executor is not administering an estate properly, contact our friendly team.

When it comes to Wills, Probate, Deceased Estates, asset protection & estate planning in Australia, you can trust the oldest law firm in South Australia, Genders & Partners to guide you through the tough decisions you must make for your family’s future care and welfare.

If you have any questions, or would like further information, please email us. Would you like a quick phone call to discuss? Use this link and book a timeslot for a free 15-minute phone consultation on my schedule

We can help you to protect yourself and your family. We look forward to being of service.

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All these and many more Probate and estate topics are available for discussion with the oldest law firm in South Australia.

Disclaimer

The information contained in this document is intended as general information only and has been prepared without taking into account the needs, objectives or financial information of any particular person.

Prior to making any decision, you should assess whether the information is appropriate to your particular needs, objectives and financial circumstances.

While Genders and Partners has taken reasonable care in the preparation of this information, subsequent changes in circumstances (including legislative change) may occur at any time and may impact on the accuracy of this information.

 

The information contained in this article is current at the date of editing – 05 August 2025.