Falling Short: Executor Failure in Estate Administration
After a death, the estate’s executor or administrator has the job of winding up the deceased’s affairs. The role involves both responsibility and personal financial risk. We take a look at what happens when an executor is failing to administer an estate and the personal risks to being an executor.
When someone passes away, their executors (named in their Will) role is to administer their estate. The executor responsibilities are to ensure that the beneficiaries receive everything to which they are entitled. Most importantly the correct procedure must be followed. The executor (or administrator, if the deceased did not leave a Will) acts in the best interests of the estate and the beneficiaries at all times.
Conducting estate administration
The executor or administrator of a Will has many responsibilities and needs to identify all of the assets in the estate and value them. They need to calculate and pay Inheritance Tax, where this is due. Where necessary, they must apply to the Probate Registry for a Grant of Probate. However, in the case of no Will they will apply for a Grant of Letters of Administration.
Once the grant is received, assets can be sold, to include property, and debts should be cleared. Estate accounts need to be prepared before the estate is distributed to the beneficiaries.
Risks in estate administration
These are some of the potential risks that may be faced by an executor when dealing with the deceased’s estate:
Clearing Debts
The executor or administrator has to ensure that all of the deceased’s debts are identified and paid. This may involve advertising in the press for creditors to come forward. Failure to clear debts may mean that a claim is made against the executor in the future. The executor is liable, even if they were unaware of the existence of the debt.
If the estate is insolvent, ie. there are not enough funds to pay all of the debts, it is essential that the executor pays creditors in strict order of priority. It is recommended that legal advice is sought to ensure that this is done and personal liability avoided.
In a case where debts are not paid on time, ie. if an outstanding tax liability is not cleared, and a penalty is imposed on the estate, the executor is liable to pay. This is because it arose through their error. Therefore the executor is liable for any losses to the estate, even if they occur because of a genuine mistake.
Identifying Beneficiaries
The executor or administrator must also ensure that all beneficiaries who are entitled to inherit are identified. However this is not always a straightforward process. It may be that the deceased has left their estate to be shared between their children. Unfortunately it may not be clear how many children there are, if the deceased did not leave a Will. Beneficiaries entitled to inherit under the Rules of Intestacy must be located.
Once again, it may be advisable to place press advertisements for beneficiaries to come forward. Failure to identify a beneficiary poses the risk that the executor faces a potential future claim for which they could be personally liable.
Claims against the estate
The estate may face a claim from someone who believes they are entitled to a share of the estate. The executor or administrator has to remain neutral in this circumstance. Furthermore, they must not actively defend the claim or they may become personally liable for paying the claimant’s legal costs if the claim succeeds.
Disputes
Following a death, disputes could arise between those with an interest in the estate. It is important to deal carefully with these to avoid personal liability.
Professional support
The role of executor or administrator is often more complex than initially anticipated. There is a degree of risk to the individual carrying out the role. An experienced probate solicitor will be able to ensure you follow the correct procedure throughout and that your exposure to personal liability is minimised. Where an executor or administrator is failing to administer an estate, those with an interest in the estate may need to take action.
Failure to carry out the administration
An executor (or administrator, if the deceased did not leave a Will) should aim to finalise the deceased’s affairs within a year. If you do not believe that any progress is being made, you have a range of options.
Citation to accept or refuse a grant
A citation is a notice calling on someone to carry out a specific act. This can be served by a beneficiary on an executor who has failed to start work on the estate administration. A citation to accept or refuse a grant requires the potential executor to respond by entering an appearance. The potential executor can decide to obtain the Grant of Probate or they can decline. In this case the person with next priority can make the application.
If the executor does not respond to the citation then they lose their entitlement to act as executor. The person who is next in order of priority can then apply. If they enter an appearance agreeing to act as executor, they should then proceed to deal with the application for a grant.
Citation to take probate
Where the executor or administrator has taken some action in respect of the winding up, known as intermeddling, but has not obtained a Grant of Probate (or in the case of an administrator a Grant of Letters of Administration), then a citation can be given to them requiring them to respond with an appearance. If they file an appearance, they should then apply to obtain the grant. If they fail to respond with an appearance, then the interested party can ask the court for permission to obtain a grant themselves.
Citation to propound a Will
If the deceased left more than one Will, then a beneficiary can serve a citation to propound a Will. For example to prove the validity of a particular Will. They will need to show that the Will in question is valid. If the person in receipt of the citation does not then file an appearance, the person serving the citation can ask the court to issue a grant in respect of the Will.
Removing an executor or administrator
If the executor or administrator has taken some action in administering the estate, but you are not happy with progress or you do not believe that they have been acting in the best interests of the beneficiaries, then you may wish to take steps to address this.
The best way to deal with this is generally by consent. The executor or administrator steps down so that someone else can take over the administration. Negotiation led by a legal expert in probate matters may be helpful where an agreement cannot easily be reached. If it is still not possible to agree, then mediation can be tried.
As a last resort, it is possible to ask the court to remove an executor or administrator who is failing in their role.
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