Contentious probate solicitor, Aimee Phillips discusses the difficulties that may occur if a beneficiary goes missing or becomes uncooperative and details what options may be available to executors or administrators of estates in these circumstances.
An executor is a person appointed in someone’s Will to be responsible for the administration of their estate when they die.
If someone dies without a Will, the person responsible is referred to as an administrator.
This article is relevant to both executors and administrators and as such reference is made to them collectively as legal representatives.
There is a statutory duty of care placed on legal representatives to carry out the administration of the estate with care and skill. This duty of care is there to ensure legal representatives act in the best interests of beneficiaries and avoid a loss to the estate. It is important therefore that legal representatives are well informed of their duties because they can be held personally liable for any breaches of the same.
Things become increasingly difficult for legal representatives if they are prevented from carrying out their duties due to an uncooperative or missing beneficiary.
In order to minimise risk and protect themselves from claims arising in the administration of the estate in these circumstances, legal representatives have several options.
Under Part 64 of the Civil Procedure Rules (“CPR”), a legal representative can apply to the Court for directions where there is some uncertainty about an aspect of the administration of an estate. For example, if a beneficiary is refusing to accept their share of the estate, a trustee can make an application to Court to determine what should happen to that share of the estate.
The funds for such an application can be taken out of the estate, therefore, this would not always be an appropriate course of action where, for example, the estate is so small that the costs of such application would be disproportionate to the benefit. It would also not be necessary to incur the costs of such an application in circumstances where the Court’s determination would be obvious from the outset.
In some instances, it would be justifiable to make an application under section 63 of the Trustee Act 1925 to pay the legacy directly to Court. However, this is considered a last resort so the legal representative should take steps to engage the beneficiary in the first instance as a part of the section 63 application would involve drafting a witness statement, in which they would have to attest to the efforts they have made to deal with the beneficiary themselves.
We dealt with a case recently in which the beneficiary had been written to on numerous occasions but to no avail; the legal representative had also incurred the cost of a process server, and a family member had even had a face-to-face conversation with the beneficiary about his legacy. Despite all of that, the beneficiary refused to cooperate which meant the legal representative could not pay his share of the estate to him. We assisted our client with a section 63 application which was subsequently granted. We even made successful submissions within the witness statement in relation to costs, namely that the costs should come out of that sole beneficiary’s legacy alone due to his conduct.
The position is slightly different if the beneficiary is missing.
In the first instance, a legal representative must take steps to locate the beneficiary. This would involve making enquiries with the beneficiary’s friends and family and, in some cases, depending on the size of the estate, it may even involve instructing a genealogist, the cost of which will be incurred by the estate. Additionally, under section 27 of the Trustee Act 1925, a legal representative should give at least 2 months’ notice in the London Gazette that they intend to distribute the estate and ask anyone who may have an interest to make their claim. If the beneficiary lives outside of London, it would also be advisable to give notice in the relevant area too. Once these preliminary steps have been carried out with no success, the legal representative can do one of the following.
In the same way as above, under Part 64 of the CPR, a legal representative may ask the Court for any of the following directions:
Permission to permit the rest of the estate to be distributed, whilst retaining a specified sum which could be used to pay the missing beneficiary, should they come forward within the limitation period, which is 12 years. If the missing beneficiary does not come forward within 12 years, the sum may be distributed to all the other beneficiaries.
Permissions to permit distribution of the estate where there is an indemnity from the beneficiaries that they will reimburse the legal representative should the missing beneficiary come forward.
An order to distribute the estate on the assumption that the beneficiary predeceased the deceased. If it comes to light that this was not in fact the case, the beneficiary can pursue the other beneficiaries for their share but they cannot pursue the legal representative.
In each of these circumstances, it would be in the legal representative’s best interests to make a Part 64 application because, if they went ahead with a contingency fund or an indemnity or presumed the beneficiary was no longer alive without an order from the Court and the contingency fund was insufficient, or one of the beneficiaries went against their indemnity, then the legal representative will be personally liable. Part 64 directions would absolve the legal representative from liability.
Alternatively, a legal representative could take out ‘missing beneficiary insurance’. Once again, whether this would be appropriate would depend on the risk involved and the size of the estate. If appropriate, the premium would be a cost incurred by the estate, though it is important to bear in mind that if the insurance did not payout for whatever reason, the legal representative would be personally liable.
Again, a legal representative could make a Part 64 application to ask the Court for directions to take out insurance but that would mean the estate incurring the cost of such an application as well as the costs of insurance which may be disproportionate to the size of the estate.
In each case, it is important for a legal representative to seek legal advice as to what would be the most suitable course of action to take. If a legal representative undertakes a course of action which they should not have, they could be liable for the costs. If you require assistance with a missing or uncooperative beneficiary, Holmes & Hills specialist contentious probate solicitors can assist you.
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