ARTICLE
14 August 2021

The Executor to this deceased estate is misbehaving – What can I do?

BP
Bennett & Philp Lawyers

Contributor

Bennett & Philp are lawyers who understand the real world. We offer practical legal solutions across every stage of life and business and with multi-disciplinary experts across five practice areas – Business Advisory, Intellectual Property, Disputes and Litigation, Property and Real Estate and Wills and Estates.
Courts are reluctant to remove an executor to an estate and will do so only in very limited or extreme circumstances.
Australia Family and Matrimonial

When you make a Will, one of the important decisions you must make is who to appoint as your executor. Often Will makers appoint their spouse, children or other family members to be the executor(s) of their Wills. In cases where the Will maker has complicated finances or complex family dynamics, they may appoint a professional such as a trusted accountant or lawyer to be an executor of their Will.

There can be many problems with deceased estates, and it is common for disputes to arise between executors, administrators, and beneficiaries. It is not uncommon for an executor to be accused of not performing his or her role properly, being slow to act and slow in distributing the estate to beneficiaries.

An executor's duties

In this article, we refer to the "executor" of an estate (i.e. the person responsible for administering the Will) however the same principles largely apply if an estate is under the control of an "administrator" (i.e. the person responsible where no Will was made).

Regardless of their title, they are known as the estate's "personal representative" under the Succession Act 1981 (Qld), and they carry important responsibilities including the following statutory duties and obligations set out under Section 52(1) of the Act:

  • Collecting and attending to the deceased's estate and administering it in accordance with the law;
  • Providing a full inventory of the estate and rendering an account of their administration of the estate when required by the Court;
  • When required by the Court, delivering up the Grant of Probate (when there is a Will) or the Letters of Administration (when there is no Will or in the case of intestacy);
  • Distributing the deceased's estate, once administered, as soon as practical; and
  • Pay interest on any general legacies in the Will (at a rate of 8 per cent per annum).

An executor also has other duties while administering the estate and this includes arranging the deceased's funeral, locating the Will, applying for probate (if required), finding and notifying beneficiaries, checking and protecting assets, confirming insurance of assets, collecting valuables and income, determining debts and liabilities, preparing tax returns and getting income tax clearances, transferring or selling assets, preparing financial statements (for companies/trusts of the estate), and defending the Will (if someone disputes or challenges the Will). This is not an exhaustive list of an executor's duties as the Will could include additional obligations and an executor also holds a number of common law fiduciary duties.

What constitutes unacceptable behaviour on the part of the executor?

Some common examples of unacceptable behaviour on the part of an executor are:

  • Failing to administer and distribute the estate as soon as practicable;
  • Preferring one beneficiary over another where there are no grounds to do so;
  • Failing to comply with his/her obligations as a litigant acting for the estate in defence of a family provision application; and
  • Putting his/her personal interests ahead of the beneficiaries (a serious conflict of interest with the estate). However, it is common for executors also be beneficiaries and that bare state of affairs does not evidence that there will be a breach of duty. The courts will only intervene when it is manifesting as an actual source of jeopardy to the due and proper administration of the estate.

Under Section 52(2) of the Succession Act 1981 (Qld), if an executor neglects to perform his or her statutory duties set out under Section 52(1) of the Act, a person aggrieved by such neglect can (if necessary) apply to the Court, and the Court may make such order against the executor as it thinks fit including an order for damages, and an order requiring the executor to pay interest and the costs of the application. Having said that, Section 44 of the Act provides some statutory protections for executors who have begun distributing the estate.

Further, if the executor wastes or coverts to his or her own use any part of the estate, Section 52A of the Act provides that the executor's legal liability continues after the death of the executor. This means the personal representative of the deceased executor will, to the extent of the available assets of the executor, be liable for the waste or conversion in the same manner as the deceased executor would have been.

Removing the executor

The case of Re Hartley (deceased)  [2020] QSC 251 is an example of what sort of behaviour on the part of an executor is unacceptable and under what circumstances an interested person can apply to the court for the removal of the executor and the appointment of an independent person such as the Public Trustee or an independent solicitor to replace the executor in the administration of the estate.

Who can apply?

An applicant for an order removing an executor must have a sufficient interest in the proceeding. In order to establish that he/she has an interest, the applicant needs to show that his or her rights would or might be affected by the removal of the executor. [1]

In Re Hartley, the applicant and respondent executor were the sons of the deceased. The applicant was left out of his deceased mother's Will and had contested the Will by applying for provision out of the estate in the District Court of Queensland (the "family provision application"). The applicant subsequently made a separate application in the Supreme Court seeking to remove the executor and for an order appointing a solicitor in place of the executor (the "application to remove the executor") claiming that the executor had failed to administer the estate as soon as may be. The executor contended that the applicant had no standing to bring the application to remove the executor.

Notwithstanding the applicant was not a beneficiary under the deceased's Will, the Court held that the applicant had standing to bring the application for the removal of the executor on the basis he, as an applicant for the family provision application under Section 41 of the Succession Act 1981 (Qld), has a sufficient interest to establish standing for the application to remove the executor.

When will the court remove an executor?

In Re Hartley, the Court held that the executor had failed to administer the deceased's estate in a timely manner and failed to "comply with his obligations as a litigant acting for the estate" in defence of the applicant's family provision application. The executor had also failed to comply with an order in the family provision application proceedings to file his affidavit by a certain date. Despite that, Justice Henry of the Supreme Court of Queensland did not make an order for the removal of the executor and adjourned the application for some months to give the executor an opportunity to conduct the family provision claim litigation consistently with his obligations as executor, and costs were reserved.

Justice Henry commented that "a more obvious and alternative remedy to advance matters" was that the applicant could have made an application in his family provision application in the District Court seeking orders to compel the executor's compliance.

There was another interesting point raised in the Re Hartley case where the applicant contended that the executor was unsuitable to act for the estate in the family provision claim litigation due to the conflict of interest as a beneficiary. Justice Henry made it clear that the mere state of affairs that an executor is also a beneficiary which is common enough does not prove that there will be a breach of duty. The courts are reluctant to intervene on the ground of such notional conflict but will intervene only when "it is manifesting as an actual source of jeopardy to the due and proper administration of the estate."

Conclusion

While an eligible family provision applicant who is not a named beneficiary under the deceased's Will has standing to bring an application for removal of an executor if the executor has acted improperly, great care should be taken prior to taking such a course of action as the courts are reluctant to remove an executor without strong grounds. There is a long line of authority that the courts consider the deceased's wishes in who they appoint as their executor are paramount, and will remove an executor only in very limited and extreme circumstances such as extreme delays or proven serious conflict of interest which would frustrate the proper administration of the estate.

Any application to the courts for removal of an executor, if done poorly, can be a costly and time-consuming process. For example, a more readily available and sensible option the applicant in Re Hartley  had was to file an application in his family provision proceedings in the District Court seeking orders to compel the executor's compliance with the previous directions order (e.g. the executor to file and serve his affidavit) or to compel the executor to perform certain duties (as opposed to a separate application in the Supreme Court to remove the executor), and substantial legal fees could have been avoided.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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