For section 39 of the Administration and Probate Act 1958 substitute —
(1) This section applies to the administration of a deceased person's estate if the estate—
(a) is insufficient to pay its debts and liabilities in full; and
(b) is not being administered under the Bankruptcy Act 1966 of the Commonwealth.
(2) Subject to subsection (4) and anything to the contrary in this Act, the administration of an estate to which this section applies must be conducted in accordance with the bankruptcy rules as in force at the date of death of the deceased.
(3) The bankruptcy rules apply in relation to the following—
(a) the rights of secured and unsecured creditors against the deceased's estate;
(b) the debts and liabilities provable against the deceased's estate;
(c) the valuation of annuities and future and contingent liabilities of the deceased's estate;
(d) the priorities of debts and liabilities of the deceased's estate.
(4) Despite anything to the contrary in the bankruptcy rules, a demand, in relation to which proceedings are maintainable against the deceased's estate, is provable against the estate despite being a demand in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust.
(5) For the purpose of applying the bankruptcy rules, a reference in the Bankruptcy Act 1996 of the Commonwealth or regulations made under that Act—
(a) to the date of an order for administration under Part XI of that Act is taken to be a reference to the date of the deceased's death; and
(b) to the date on which an administration under Part XI of that Act is deemed to have commenced under that Part is taken to be a reference to the date of the deceased's death; and
(c) to the Court is taken to be a reference to the Supreme Court.
(6) In this section—
"bankruptcy rules "means the provisions of the Bankruptcy Act 1966 of the Commonwealth and regulations made under that Act applying in relation to the administration of estates of deceased persons in bankruptcy.
(1) This section applies if the estate of a deceased person is sufficient to pay its debts and liabilities in full.
(2) Subject to any contrary intention appearing in the deceased's will and in accordance with the Rules, the real and personal estate of the deceased must be applied towards the discharge of the deceased's funeral, testamentary and administration expenses, debts and liabilities in the following order—
(a) from property specifically appropriated, devised, bequeathed, directed to be sold (either by a specific or general description) or subject to a charge for the payment of a debt or liability of the estate;
(b) from property comprising the residuary estate and property in relation to which a disposition in the deceased's will operates as the exercise of a general power of appointment;
(c) from property specifically devised or bequeathed, including property specifically appointed under a general power of appointment and any legacy charged on the property devised, bequeathed or appointed.
(3) For the purpose of subsection (2)—
(a) property must be applied to the discharge of the estate's debts and liabilities rateably according to value; and
(b) if specific property is applied to the payment of a debt or liability of the estate and a legacy is charged on that property—
(i) the legacy and the property must be applied rateably according to the value of the property; and
(ii) the value of that property must be reduced by the amount of the legacy charged on it.
(1) Subject to subsection (2) and any contrary intention in the deceased's will, any pecuniary legacy must be paid out of—
(a) any property comprising the
residuary estate; or
(b) any property in relation to which a disposition in the deceased's will operates as the exercise of a general power of appointment.
(2) If the property referred to in subsection (1) is insufficient to pay any pecuniary legacy, the pecuniary legacy must abate proportionately.
X's will gives pecuniary legacies totalling $4000 to A, B and C. A is to receive $500, B is to receive $1500 and C is to receive $2000. X's available property has a value of $2000 and is insufficient to pay the pecuniary legacies.
If the pecuniary legacies must abate proportionally and only 50% of the value of the gifts is available to meet them, each gift must abate by 50%. As a result, A receives $250, B receives $750 and C receives $1000.".