Disputes between executors, beneficiaries and trustees can easily arise in the process of administering the estate of a loved one. It can be a burdensome process and people are often surprised by the amount of work required and the time it takes.
The functions of a ‘personal representative’ include:
- Arranging the funeral
- Applying for a grant of probate if there was a will or letters of administration if not
- Collecting in the assets of the estate
- Identifying and paying the debts of the estate
- Preparing estate accounts and settling any inheritance tax liability
- Distributing the estate in accordance with the will or intestacy rules
- Making investments if trusts are created by the will
- Safeguarding and managing the assets of the estate whilst the administration process is completed
A will usually appoints two or more people to act as executors who need to work together. There is, therefore, plenty of scope for disagreement during the administration process and disputes can often arise.
Our expert team are experienced in managing disputes between executors, trustees and beneficiaries and can advise on the legal options available.
Removing or Substituting an Executor
Most disputes are resolved through negotiation and mediation between the parties. However, where that is not possible the High Court has the power to order removal and/or substitution of an executor under the Administration of Justice Act 1985.
The grounds for removal are:
1. Incapacity - because of some physical or mental disability which prevents the executor from performing their duties.
2. Disqualification - because of conviction of a crime resulting in imprisonment
3. Unsuitability - because of serious misconduct or a conflict of interests. This is the most common ground on which applications for removal are threatened and made. However, the case law is clear that friction between executors and beneficiaries resulting in rude or uncooperative behaviour or delay is not enough.
The conduct must be serious such as stealing from the estate or causing loss, for example by making payments not authorised under the will, or breaching the executor’s legal duties.
It is much better for potential disagreements between executors to be avoided before they become expensive disputes.
The simplest way to achieve this is for one or more of the named executors to renounce their appointment. This option is available after the person who made the will has died and the executor has not started to deal with the deceased estate (known as intermeddling).
Once an executor starts dealing with the estate he can only be removed or replaced by order of the court.
Renunciation simply requires completion of a form of renunciation signed by the executor in the presence of a witness and submitted to the probate registry with the will.
Claims against Executors
The most common cause of complaint against personal representatives and trustees is delay and, in most cases, no loss the estate occurs.
However, the Trustee Act 2000 imposes a statutory duty of care which applies to personal representatives who can be held personally liable for wasting of the assets of the estate (known as devastavit) resulting from failure to perform their legal duties.
Therefore, in addition to an application for removal of an executor or trustee it is possible to bring a claim against them personally for any loss to the estate arising from their actions if they are in breach of their legal duties.
Our client was the sole beneficiary of the estate of her late father. She was a minor at the time of his death and was living with her mother who was estranged from her father. The main assets in the estate were 3 buy to let properties. Each was tenanted and mortgaged.
The will appointed a firm of solicitors as executors but administration of the estate was delayed because our client’s mother made an application for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975. During the period of the delay the solicitors were inactive and failed to manage the rental properties.
We successfully issued a claim against the solicitors for losses to the estate caused by:
• Failure to secure tenants for the rental properties which remained empty for many months
• Failure to recommend a sale of the properties. The property market was in decline in the area and with the loss of rental income and mortgage arrears the properties went from positive to negative equity.
• Settling the claim by our client’s mother under the Inheritance Act without requiring our client to obtain independent representation and court approval (which is required for settlement of claims by or against minors).
If you are involved in an executor or trustee dispute call us today on 01793 853200 or fill out our quick enquiry form to arrange a free initial consultation with our expert team.