If you are a named as a beneficiary of an estate, you have a right to know that the estate will be administered appropriately and without delay by the executor of the estate.
If an estate is not administered appropriately, you may well be able to exercise certain rights, including Court action, to ensure that the estate is then administered in an orderly and proper way.
The role of the executor
The main role of the executor is to act in accordance with the wishes of the deceased as set out in their will by collecting assets, paying liabilities and distributing thedeceased's assets to the beneficiaries named in their will.
The executor's relationship with the beneficiaries of the estate is fiduciary, in other words the executor must act in the best interests of the beneficiaries.
The executor has several duties including:
- disposing of the body;
- obtaining Probate of the will if there is one;
- collecting in and securing the assets of the estate;
- determine and discharging the deceased's debts;
- keeping proper accounts and distributing the estate assets.
Being an executor can be a very onerous and difficult task indeed. The vast majority of executors are lay family members, not professionals such as accountants, lawyers or trustee organisations. Because a degree of the human element is involved, problems of course arise when executors do not do what they are supposed to do.
The most common breach of the executor's fiduciary duty is delay in obtaining Probate or administering the estate.
The executor's year
The Courts have developed a "rule of thumb" when determining what is or is not an acceptable timeframe for the administration of estates and the payment of bequests to beneficiaries.
Because the duties of an executor include the sometimes slow and tedious tasks of obtaining a Grant of Probate and discharging the deceased's debts, generally speaking the Courts have said that the executor has one year (called "the executor's year") from the date of death of the deceased to finally administer the estate and pay any residue to the beneficiaries.
If an executor fails to realise any assets within the executor's year, the onus is on the executor to establish some valid reason for the delay.
Distributing the estate too early
On the other hand, there may be certain pressures on the executor to deal with the estate, such that the executor may distribute the estate prematurely without holding back sufficient funds to cover any taxation liabilities, or when given notice of a potential claim against the estate, disappointed beneficiaries or other claimants to the estate.
In these instances, the executor may have a right of indemnity against the estate and claim money that is overpaid to beneficiaries, but if the executor is unable to recoup these monies for whatever reason, then the beneficiaries or other claimants have missed out they will have a claim against the executor personally.
Conflict of interest
Because the executor has a fiduciary duty to act in the best interests of the executors, it is critical that the executor does not act in such a way that is in conflict with those interests. There is no difficulty with an executor being also a beneficiary of the estate. Where the difficulty arises, however, is when there is a conflict of interest or a potential conflict of interest in an individual acting in his capacity as executor of the estate as well is being a beneficiary of the estate.
In cases of a serious conflict of interest, it may be possible for an interested party, for example another beneficiary, to apply to the court for orders requiring executor to, for example, produce accounts of his administration of the estate, or even for the removal of the executor.
Administration and removal of executors
If an executor delays in obtaining a grant of probate in relation to the to the estate or, having obtained a grant, delays in the administration of the estate, it is possible for an interested party to make application to the court for the removal of executor and the administration of the estate by an independent person such as the Public Trustee (called an "administration order").
However, an administration order is usually the last resort. Short of an administration order, the Court usually will make any number of the following orders:
- requiring executors to furnish accounts of their administration of the estate;
- directing executors to do or abstain from doing any act relating to the estate;
- approving transactions such as the sale, purchase, compromise or other transaction; and
- determining any question arising in the administration of the estate.
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.