Sections 326-331 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
What happens when a will leaves several legacies but the estate, after debts, cannot pay them all? Sections 326 to 331 answer that. They also say when an executor need not pay a legacy without an indemnity. This article explains the six sections, with the Act's own illustration, as per the text of the Act consulted.
If the estate is subject to contingent liabilities, the executor or administrator is not bound to pay any legacy without a sufficient indemnity (s.326). If the assets, after debts, necessary expenses and specific legacies, cannot pay all the general legacies in full, they abate in equal proportions (s.327). A specific legacy is delivered without abatement if the assets are enough for debts and necessary expenses (s.328); if they are not, specific legacies abate rateably (s.330). A demonstrative legacy has a preferential claim on its fund (s.329).
Section 326: indemnity
If the estate of the deceased is subject to any contingent liabilities, an executor or administrator is not bound to pay any legacy "without a sufficient indemnity to meet the liabilities whenever they may become due".
The words give a protection, not a duty to withhold. The executor is "not bound" to pay without indemnity. The text does not say what form the indemnity takes, who gives it or what it costs. For the stamp position on a separate document of that name, see our post on stamp duty on an indemnity bond; whether any bond is needed in a given estate is a matter of the facts and the current law.
If you are an executor and a legatee is pressing for payment while claims against the estate remain open, early advice on estate administration can help you decide what to ask for.
Kinds of legacy: a reminder
The Act uses three kinds of legacy in these sections: specific, demonstrative and general. This article uses them as the sections do. The Act's own provisions on each kind of legacy are in Part VI of the Act; for the residue, see our post on residuary legatees. Here we only follow the rules for what happens when assets fall short.
Section 327: general legacies abate equally
If the assets, after payment of debts, necessary expenses and specific legacies, are not sufficient to pay all the general legacies in full, the general legacies "shall abate or be diminished in equal proportions". Two further rules follow, in the absence of any direction to the contrary in the will:
- the executor has no right to pay one legatee in preference to another; and
- he has no right to retain any money on account of a legacy to himself or to any person for whom he is a trustee.
An invented example: a will leaves Rs. 1,00,000 each to three nephews as general legacies. After debts, necessary expenses and specific legacies, only Rs. 2,40,000 is left. The legacies abate in equal proportions, so each nephew receives Rs. 80,000, unless the will directs otherwise.
Section 328: specific legacy not abated when assets suffice
Where there is a specific legacy and the assets are sufficient for the payment of debts and necessary expenses, the thing specified "must be delivered to the legatee without any abatement". So a specific legacy is protected so long as debts and necessary expenses can be met.
Section 329: demonstrative legacy
Where there is a demonstrative legacy and the assets suffice for debts and necessary expenses:
- the legatee has a preferential claim for payment of his legacy out of the fund from which it is directed to be paid, until that fund is exhausted; and
- if, after the fund is exhausted, part of the legacy remains unpaid, he is entitled to rank for the remainder against the general assets, as for a legacy of the amount of the unpaid remainder.
In other words, the demonstrative legatee is first paid from the named fund and then stands in line with general legatees for any balance.
Section 330: rateable abatement of specific legacies
If the assets are not sufficient to answer the debts and the specific legacies, an abatement shall be made from the specific legacies "rateably in proportion to their respective amounts".
The Act's illustration
A bequeaths to B a diamond ring valued at 500 rupees, and to C a horse valued at 1,000 rupees. It is necessary to sell all the effects of the testator, and the assets, after payment of debts, are only 1,000 rupees. Of this sum, rupees 333-5-4 are paid to B and rupees 666-10-8 to C. The figures are as printed in the Act's illustration, in the old rupee-anna-pie notation, and show a division in the proportion 500 to 1,000. They are the Act's illustration, not a current example.
Section 331: what is treated as a general legacy for abatement
For the purpose of abatement, three things are treated as general legacies:
- a legacy for life;
- a sum appropriated by the will to produce an annuity; and
- the value of an annuity when no sum has been appropriated to produce it.
| Section | Situation | Rule |
|---|---|---|
| 326 | Estate subject to contingent liabilities | Not bound to pay any legacy without sufficient indemnity |
| 327 | Assets short for general legacies | Abate in equal proportions; no preference to one legatee; no retention for own legacy |
| 328 | Specific legacy, assets enough for debts and expenses | Delivered without abatement |
| 329 | Demonstrative legacy, assets enough | Preferential claim on the fund; remainder ranks against general assets |
| 330 | Assets short for debts and specific legacies | Specific legacies abate rateably in proportion to amounts |
| 331 | Abatement | Life legacy, annuity sum and annuity value treated as general legacies |
Where these rules sit in the order of payment
Abatement comes after the order of payment explained in our article on sections 319 to 325: debts first, then legacies. For the executor's later step of assenting to a legacy, see sections 332 and 333. For a general view of an executor's duties, see our guide on executor duties under a will.
Later amendments are not shown in the text consulted and should be checked.
Need help when the estate is short?
If an estate cannot pay all the legacies, or you are a legatee unsure of your position, we can explain how the Act treats each kind of legacy and help you plan the next step. Start with our legal consultation service.
Key takeaways
- An executor is not bound to pay a legacy without sufficient indemnity where the estate has contingent liabilities (s.326).
- General legacies abate in equal proportions; the executor may not prefer one legatee or retain money for his own legacy unless the will directs otherwise (s.327).
- A specific legacy is delivered without abatement if assets suffice for debts and necessary expenses (s.328), but abates rateably if they do not (s.330).
- A demonstrative legatee has a preferential claim on the named fund and ranks for any balance against general assets (s.329).
- Life legacies and annuities are treated as general legacies for abatement (s.331).
Read next
- Sections 319-325: collecting the estate and order of payment of debts
- Sections 332-333: executor's assent to a legacy and its effect
- Sections 349-350: produce of a specific legacy and of the residuary fund
- Residuary legatee: sections 102 and 103 and challenging a will after death
Disclaimer: Based on an unofficial print of the Indian Succession Act, 1925 showing amendments up to the Indian Succession (Amendment) Act, 2002 (26 of 2002), as consulted on 2 October 2026. It explains the words of the statute only; later amendments, State amendments and rules, court fees and the way courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.