Dealing with difficult Executors

By Lorraine Jeffery, Partner at Michelmores LLP

Difficult Executors can be the source of the problem. Whether they are too slow or too rash, too secretive or too biased, it can cause the administration of the estate to grind to a halt.

There are some warning signs to look out for and there are ways to deal with those.

Warning signs that a removal application may be on the cards

With Executors or Administrators of an estate (collectively referred to as the Personal Representative(s) (PR[s]), you should look out for the following warning signs:

• Lack of communication. Refusing to inform you of the value of the estate and what it comprises

• Significant delay without a good reason

• Conflict of interests. The PR has an interest contrary to that of the beneficiaries. For example:

  • They could be a shareholder or co-director of a business that forms part of the estate and it is not in their personal interest for a particular event to happen such as the sale of shares

  • They may wish to buy an asset of the estate

  • They may wish to settle a debt which they claim is owed by the Deceased to the PR, such as for fees or expenses charged by them for caring for the Deceased during their lifetime

Tools at the beneficiary's disposal

1. Invite the Executor to renounce

If an Executor has not “intermeddled” in an estate, they can simply renounce.

So, what constitutes intermeddling? The threshold is higher than most expect. Calling in and holding the Deceased’s assets, settling most types of debts, and transferring property would constitute intermeddling. Whereas urgent repairs to a property to preserve the asset, settling the funeral expenses, and insuring assets would not.

If the Executor agrees to step down but has intermeddled, the usual course of action is to apply by consent for their removal under s.116 of the Senior Courts Act 1981 or s.50 of the Administration of Justice Act 1985 (AJA ‘85). This is usually done “on paper” without the need for a court hearing.

2. Citation to accept or refuse the Grant of Probate

If the Executor has delayed in taking out the Grant of Probate, they can be cited to accept or refuse the Grant (Rule 47 of the Non-Contentious Probate Rules 1987). This application is brought by any person who would be entitled to the Grant if the Executor renounced. If the Executor has not intermeddled, and does not enter an “appearance” when cited, the applicant can then apply for the Grant.

Rule 47(3) of the Non-Contentious Probate Rules 1987 stipulates that if the Executor has intermeddled, the applicant should wait to apply for the citation until six months after the Deceased has passed. And if the Executor still fails to engage and does not enter an “appearance” when cited, the applicant can apply for a summons requiring the Executor to take out the Grant within a specified timeframe or for the Grant to issued to the applicant or another individual.

3. Application for an account

A residuary beneficiary is entitled to interim estate accounts. If none are forthcoming or questions remain unanswered, the beneficiary may apply to the Probate Registry by summons for an order that an “inventory and account” is given by the PR. Alternatively, an application can be made under Part 64 of the Civil Procedure Rules for the PR to provide and verify the estate accounts.

These tools would provide a greater insight into the estate and the actions of the PR to date. They have the added advantage of potentially being a preliminary step in setting the scene for removal application should the PR refuse to step down consensually.

4. Removal – if contested

4.1. Procedure

Prior to the Grant, the application can be made under s.116 of the Senior Courts Act 1981 or s.50 of the Administration of Justice Act 1985 (AJA ‘85) in respect of Executors. After the Grant has been issued, the application to remove a PR can only be made under s.50 of the AJA ‘85.

4.2. Grounds for removal

The court my grant the order for various reasons. These include:

• The PR has lost capacity

• The PR is unsuitable. For example:

  • A conflict of interest between that of the PR and their personal interests has arisen;

  • Mismanaging or failing to properly administer the estate;

  • Refusal to take out the Grant or get on with administering the estate;

  • A breakdown of relationship between the PRs and beneficiaries which is impeding the due administration of the estate; and

  • There is a dispute involving the PR (who may also be a beneficiary) and an interim Administrator is needed pending resolution of the same.

Chief Master Marsh in Harris v Earwicker [2015] EWHC 1915 (Ch) set out the factors which the court will take into account. They are briefly summarised as follows:

• Whether the estate is being administered properly;

• Whether there is material wrongdoing or fault which is endangering the estate;

• The wishes of the Testator;

• The wishes of the beneficiaries (when their welfare is a primary concern, a unanimous wish for the PR to step down will be “important” – Chief Master Marsh in Long v Rodman & Ors [2019] EWHC 753 (Ch));

• Whether the relationship between some or all of the beneficiaries and the PRs has broken down to the extent that it has become difficult or impossible for the PRs to complete the administration of the estate (Brudenell-Bruce v Moore & Cotton [2014] EWHC 3679 (Ch)); and

• The additional cost of replacing the PR, particularly if a professional person is proposed.
  
  

4.3. Who should the replacement PR be?

It is not simply a case of a disgruntled family member insisting on an estate administrator of their choosing. Instead, the order of priority as set out in the Non-Contentious Probate Rules 1987 must be followed. Rule 20 is followed if there is a Will and Rule 22 is followed if there is no Will. Often, an independent estate administrator will be appointed, with anyone with an interest to take out the Grant agreeing on who that should be and allowing their interest to be passed over.

If an application is made under Rule 47 of the Non-Contentious Probate Rules 1987, and the applicant is lower down the order of priority, those above the applicant can take out the Grant if the Executor does not enter an appearance. It’s sensible to try to agree with anyone above the applicant in the order of priority to take out the Grant that they allow their interest to be passed over.

5. Devastavit

In addition to facing a removal application and the costs associated with that, the Executor may also be faced with a claim by the beneficiaries for breach of trust (devastavit). This arises where there has been maladministration or negligence and a loss has been suffered as a result.

Examples include:

• Whether legacies are paid to the wrong people;

• Transferring assets to the wrong person;

• Paying expenses from the residue when they should have been paid from a specific legacy; and

• Distributing the estate without discharging all the estate expenses.

Costs

The costs of a successful application for an account are often met by the PR personally. This risk often encourages PRs to be more forthcoming and transparent.

Whether the removal application is by consent or contested will have a significant impact on the costs. In the interests of reaching a swift and amicable solution, it is usually agreed that the costs of an uncontested removal application would come from the estate.

However, PRs who have been invited to step down but refuse to do so should proceed with utmost caution. They are expected to remain neutral and so will be exposed personally to their own costs and those of their opponent if they unsuccessfully defend their position.

Conclusion

Executors are under a duty to gather in the assets of the estate, meet the liabilities, and distribute the balance to the beneficiaries. They are not there for personal gain, and they should not take too long about it, or they may quickly erode the patience of beneficiaries. Some estates can take much longer to administer than others, particularly if there is a tax issue, but keeping open lines of communication with beneficiaries will help to keep them onside.

This article is featured in the spring 2022 edition of the quarterly news digest, Entitlement. Click the image below to download your free copy of Entitlement for more informative articles.

Topics: Entitlement, Personal Representatives