When someone passes away, their debts and liabilities don’t die with them. One of the most important duties of an executor is to ensure that these debts are properly paid before any distribution is made to beneficiaries. In South Australia, section 83 of the Succession Act 1936 (SA) (the Act) sets out the statutory order in which a deceased person’s assets must be applied to pay these debts. It’s crucial that executors understand and follow this order to avoid legal issues or personal liability.
What is the Order of Application?
Section 83 provides a specific sequence for how assets should be sold or used to meet the debts, liabilities, funeral expenses, and costs of administering the estate. Broadly, the order starts with residuary personal property, then moves to residuary real estate, followed by general legacies, and finally to specific gifts or bequests, which are only sold if the earlier categories do not cover the debts.
This statutory structure 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.
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 Will-maker can specify a different order of application or direct that certain assets, such as a life insurance policy or a particular investment property, 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. Call us on 1300 654 590 or email us for clear, practical advice.
Why This Matters
Failing to apply the correct order can have serious consequences. If an executor sells a specific bequest (like a family heirloom or property left to a named beneficiary) before exhausting residuary assets, they may face legal challenges from beneficiaries, and potentially be held personally liable. Section 83 provides a clear framework to protect executors from such risks, provided they act in good faith and in accordance with the law and the Will.
Final Advice for Executors
As an executor, you have a fiduciary duty to administer the estate properly. Understanding your responsibilities under section 83 of the Act 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, errors in this area can be costly.
We’re Here to Help
At ADLV Law, our experienced lawyers 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, Call us on 1300 654 590 or email us to speak with one of our trusted advisers.
Glossary
Residuary Personal Property: Residuary personal property includes any personal (non-real estate) assets of the deceased that remain after debts, liabilities and specific gifts have been settled. Examples of residuary personal property include bank account balances, shares, jewellery, or motor vehicles.
Residuary Real Estate: Residuary real estate refers to the deceased’s interest in real property (i.e. land or buildings) that remain after debts, liabilities and specific gifts have been settled. This can include both the deceased’s primary residence or investment properties.
General Legacies : A general legacy refers to a monetary gift made under a Will that is not attributed to any specific asset or source. For example, the following statement would constitute a general legacy:
I give the cash sum of $1,000 to my brother, John Smith of 123 King William Street, Adelaide SA 5000.
Specific gifts / bequests: Specific gifts/bequests are assets of the deceased which have been specifically identified to be dealt with in a certain way by gifting it to a particular beneficiary. A specific gift/bequest can include personal property or real property. For example, the following statements would constitute a specific gift/bequest:
I give my engagement ring to my daughter, Jane Smith of 123 King William Street, Adelaide SA 5000.
I give my interest in the property at 123 King William Street, Adelaide SA 5000 (CT 1234/567) to my son, John Smith of 567 Currie Street, Adelaide SA 5000.
The information contained in this post is current at the date of editing – 05 June 2025.
