What do professional executors do if a dispute develops in an estate? Tread with care and be careful not to go too far in trying to resolve the issue, as your role is to stay neutral while others sort out any differences, or you might suffer on costs!
Earlier this month, the High Court in Bristol had to consider whether or not a professional executor was entitled to cost protection from an estate. It was a beneficial lesson for executors.
The Lines v Wilcox [2019] EWHC 1451 (Ch) case was a dispute over the beneficial ownership of their house, which had once belonged to the deceased but was transferred to the defendants, one of his children and her husband in 2005. This was at a time when the deceased allegedly lacked sufficient mental capacity to make such a transfer, or had been unduly influenced. If the transfer was found to be invalid, then the property would be brought back into the deceased’s estate, and would be shared between the deceased’s four children.
The claimant, who was the solicitor appointed as the administrator of the estate, wished to issue a claim against the first and second defendants to set aside the 2005 transfer. He applied to the court for a Beddoe order, which would have granted permission for him to recover his costs from the estate, and should the claim not succeed, indemnified him against any costs order in favour of the defendants.
The court refused to grant the claimant’s application on the basis that the role of a personal representative in hostile trust disputes is to remain neutral and not take proceedings at the risk of the estate. The court found that the claimant should instead allow the deceased’s children to fight out the matter between themselves, at their own risk as to costs.
So many professionals find themselves appointed as executors and/or trustees of an estate, but can often be unclear as to the extent of their responsibilities and duties to the beneficiaries. Usually, a neutral executor or personal representative would be entitled to cost protection if they became involved in a dispute in relation to an estate. Often, the executor can feel under pressure to have to bring claims, but can’t be expected to do so if it results in a personal financial risk. This decision by the Court to essentially let the family ‘fight it out’ between them, helps to remove that pressure. It has put the onus on the parties who stand to either gain or lose financially from the dispute, to either resolve it, or issue the claim themselves.
Even aside from the cost implications for a professional executor becoming involved in litigation between family members, there’s a danger if an executor starts to extend their involvement beyond their duties by trying to sort it out. A neutral executor has an overriding duty to the estate to act impartially, in the best interests of the estate, and to comply (where possible) with the wishes of the testator. By getting in between warring family members, the executor risks losing that impartiality and therefore being in breach of their duties. Professional executors faced with this type of situation are always better to advise the respective family members to seek independent legal advice as soon as possible, from a specialist Will Trust and Estate Disputes solicitor.
Published: July 2019
A monthly briefing from Irwin Mitchell Private Wealth
July 2019
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