The Heir as a Key Figure in the Bankruptcy Procedure of the Deceased Person

The current regulation of insolvency of the deceased person in Russia is named as «bankruptcy of the inheritance estate» in most part of the scientific papers dedicated to this legal topic. Researchers use this naming to justify the restoration of the deceased's legal capacity. This fiction helps recognize the deceased as the subject of bankruptcy before the final distribution of property among creditors. This kind of a «resurrection» of a citizen generates a legal consequence as if a separation of property masses appeared. Basis of such an interpretation might lie in paragraph 4 of Article 223.1 of Federal Law «On Insolvency (Bankruptcy)». The resulting conclusion of this approach leads to competition between creditors of the heir and creditors of the deceased, which makes liability of the legal successor unlimited. From that point of view, the position of the heir is in obvious contradiction with the norm of paragraph 1 of Article 1175 of the Civil Code of the Russian Federation. This is why the Supreme Court describes the status of the heirs as exclusively procedural. The heir has an interest in the inheritance mass, but a procedural understanding of his status cuts off his material position in the insolvency procedure. By referring to the history of law and comparative case law (English and German law), the status of the heir in the bankruptcy procedure of the deceased person is determined in the research. The author also reviewed the legislation, its scientific understanding, and application in relation to the implementation of the principle of limited liability for the debts of an insolvent citizen. After the examination of the Russian approach in the regulation of bankruptcy of the deceased, the author suggests that the idea of giving the heir the status of a fictitious debtor should be abandoned. The principle of limited liability for the debts of the deceased person proves that there is no automatic «mixing» of property upon inheritance. The heir should be perceived as the owner of two blocs – personal and hereditary – regardless of the fate of the property transferred to him. This understanding imposes the legal successor with the duty to «liquidate» the inheritance, as it happens in insolvency. Isolation of property blocs as an a priori construction serves as the key point of this paper and brings consistency to the interpretation of the current regulation. So, competition between creditors is excluded, grounds for personal liability of the legal successor are proposed, and mutual obligations are preserved. But, most importantly, the figure of the heir is determined as the key one to the process of insolvency of the deceased.

law of succession, legal succession, insolvency, heir, deceased person, debtor, inheritance, creditors of a deceased person, separation, limited liability of an heir