Executor disputes – What you need to know
12 November 2020
Executors of a Will are commonly referred to as “Personal Representatives” of the deceased. An executor is appointed by the deceased and is primarily tasked with distributing the estate according to the deceased persons wishes, as laid down in their Will. It is an executor’s duty to prioritise the wishes of the deceased.
Executors are expected to carry out their duties in an impartial and fair manner. Their duties are not only limited to the deceased but also extend to the beneficiaries of the Will. Some of their responsibilities are as follows:-
- Collecting and protecting all assets in the estate;
- Valuing the estate of the deceased;
- Paying off any liabilities or debts that the deceased owed with assets from the estate;
- Pay relevant taxes such as inheritance tax, income tax and capital gains tax, etc;
- Distribute assets to the beneficiaries according to the Will or intestacy rules (in the case that the deceased has not left a Will behind);
- Arrange transfer of ownership of properties included in the estate;
- Finalise and close any relevant accounts.
Sometimes, an executor may not fulfil their obligations in the manner required by the relevant Will or the law. For example, when distributing the assets included in the estate, an executor may be biased towards one of the beneficiaries of the Will. Such instances lead to executor disputes. These kinds of disputes may arise between executors or between executors and beneficiaries. Examples of executor disputes:
- Dishonest and deceitful conduct
- prevents or misleads the beneficiaries about the contents of the Will;
- does not fully disclose the assets included in the estate;
- prevents or discourages a beneficiary from enforcing their rights by discouraging them from going to Court or negotiating with other beneficiaries, etc.
There are many reasons why an executor may conduct themselves in such a manner. One reason may be that the executor wants to keep the assets for themselves. Another may be that the executor wishes to give away the relevant asset to a beneficiary they are closely associated with, instead of distributing according to the terms of the Will.
- Improper conduct
This is a broad category. It could include the following scenarios:
- The executor is biased towards one or more beneficiaries of the Will;
- The executor is closely associated with one or more beneficiaries of the Will and hence, favours these beneficiaries by being more generous when it comes to the distribution of the assets;
- Any other unjust behaviour of the executor.
If a beneficiary brings a case on the grounds that they have been mistreated by the executor, they should provide evidence supporting their claims. Without any evidence of improper conduct, the court will not allow the claim to proceed.
- Disagreements concerning the administration of the Will
- The distribution of the estate;
- Whether a certain property or asset included in the estate should be sold or not;
- Where the relevant parties should invest with the assets of the estate;
- The valuation of certain assets.
In these situations, beneficiaries and executors often choose to resolve matters through alternative dispute resolution methods such as arbitration and mediation.
- Going against the interests of the estate:
A beneficiary, who believes that an executor is not operating within the best interests of the estate, may bring an action. Many situations come under this category, for example, the executor is biased towards one of the beneficiaries, or is not properly evaluating the worth of properties included in the estate, etc.
- Conflict of Interests
Sometimes the duties of the executor may conflict with their personal interests. This may prove to be harmful to the beneficiaries of the estate. There may also be a conflict of interest if the executor of the Will is also the beneficiary of the Will. An example of a dispute under this category could be that the deceased has left behind a business or property in which the executor has an interest (for example, by being an investor, director or shareholder, etc.). Therefore, when evaluating the worth of this business or property, the executor may let their personal feelings affect their judgment and could either exaggerate or understate its value. There may also be disagreements between the executor and beneficiaries concerning the decision of selling the relevant business or property.
- Neglecting other duties:
- does not administer the estate according to the terms of the Will;
- unnecessarily delays matters and takes a long time distributing the assets of the estate;
- makes a wrong valuation of the assets and / or property of the estate;
- sells the asset or property for less than what it is actually worth;
- makes a wrong decision concerning investments which lead to the beneficiaries suffering a financial loss;
- is careless when distributing assets and therefore gives away the concerned asset to an individual who is not a beneficiary of the Will.
Disagreements between executors
A testator may appoint more than one executor. The maximum number of executors that can be appointed is 4. It is important that the executors act jointly in administration of the will. Sometimes, executors may disagree amongst themselves about various matters, such as:
- How should the estate be distributed?
- Whether a certain property or asset should be sold?
- Where should the relevant parties invest?
Disputes may also occur if one of the executors refuses to disclose the contents of the Will to another executor. The result of these disputes is that there is a delay in the administration of the estate, which leads to the beneficiaries being negatively affected.
LAW REGARDING EXECUTOR DISPUTES
The above disputes have the effect of a breakdown of confidence and trust between executors and beneficiaries. Relevant parties have many options available when it comes to resolving disputes or claiming any other relief.
In the case of disputes amongst executors, the concerned executors can apply to the Court. The Court can provide directions as to the appropriate administration of the estate. It can also issue a grant in favor of one executor and similarly, can invalidate a grant for another executor. In situations where one executor is refusing to share the contents of the Will with the other executor, the Court can order the former executor to disclose relevant information. The Court, if deemed appropriate, can appoint a new executor who may administer the Will.
In situations where there is a dispute between the executor and beneficiaries of a Will, the latter has the option of making an application to the Court under Senior Courts Act 1981, Section 116. In this application, the beneficiaries can request the Court to remove and substitute the relevant executor. For a successful claim under this provision, it is essential that the beneficiaries make an application before the executors have taken a grant.
Beneficiaries can opt for another provision for the removal and replacement of the executor, The Administration of Justice Act 1985, Section 50. This provision can be implicated in both instances where the executors have taken a grant, and before the executors have taken a grant. It primarily addresses the issue of the executor engaging in incompetent, fraudulent and corrupt activities.
When making a decision under the Administration of Justice Act 1985 or Senior Courts Act 1981, the Court will give importance to the fact that the executor was appointed by the testator / deceased. It will consider the interests and rights of the beneficiaries. Furthermore, disagreements and hostility between the executors and beneficiaries is not a good enough reason for the former to be removed and replaced. The beneficiaries must show that the executor was not properly carrying out their duties. Again the powers of the Court are discretionary; the Court will not necessarily decide in favor of the applicant. It will only remove and replace the executor if it deems it appropriate. Additionally, the burden of proof is on the party filing the claim. The applicant must have sufficient and convincing evidence supporting their claim. Without such evidence the claim is unlikely to succeed.
These types of disputes are often complicated and time sensitive, so receiving early legal advice from a Contentious Probate Solicitor can help you to get the best possible outcome. Our team is friendly and approachable whilst being technically adept and highly professional. Our costs are realistic and always transparent.
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The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.