The importance of taking advice when selecting executors and carrying out executorship duties

As a reminder, executors must be:

1. transparent in their dealings;
2. mindful of actual or perceived conflicts of interest;
3. efficient in progressing the estate administration;
4. focused on maximising the value of the estate for beneficiaries;
5. acting in the best interests of all beneficiaries; and
6. compliant with estate administration and trust laws.

The Judge in this case also noted that many of these considerations apply equally to trustees, further reinforcing the need for sound legal guidance throughout.

Background

The Deceased had appointed his three children as executors of his Will. His estate was relatively complex, comprising an interest in the family accountancy business, a property in France, and a company owning a freehold office building in Melton Mowbray. Following certain specific bequests, the residue of the estate was to be divided equally among the children.

One of the children, the Defendant, was an accountant and a partner in the family business. He took on a leading role in administering the estate, seemingly to acquire both the business and the French property, in line with a non-binding Letter of Wishes left by the Deceased. The executors didn’t obtain legal advice at the beginning of the process and chose to informally divide responsibilities among themselves which contributed to a breakdown in relations among the siblings. The resulting dispute not only fractured family relationships but also led to legal costs that likely far exceeded the cost of professional advice.

Allegations and Judgment

The allegations against the Defendant included:

• withholding material information from his co-executors;
• Attempting to rely on a non-binding Letter of Wishes, potentially unaware of its legal limitations; and
• proposing a distribution of assets in specie as part of his share of the residue without properly accounting for asset value, tax implications, or the potential impact on the other beneficiaries’ shares.

While the Judge did not find the Defendant guilty of any misconduct, they concluded that the actual or perceived conflicts of interest had materially impaired the administration of the estate which resulted in the Defendant being removed as an executor.

The Judge advised the remaining siblings to reflect on whether they could continue to act impartially and in the best interests of all beneficiaries, including their brother. The Judge indicated that appointing an independent executor may be a sensible step to stabilise the situation and facilitate effective administration.

Key takeaways

This case reinforces the importance of:

• careful selection of executors;
• clear and thoughtful Letters of Wishes and testamentary guidance; and
• executors obtaining timely and proper legal advice.

In doing so, it can help preserve family relationships, avoid delays, reduce the risk of conflict, and ensure beneficiaries receive their rightful inheritance.

If you are reviewing your Will or thinking about who to appoint as executor, our Wealth Preservation team is here to help.  Sometimes, with the benefit of objectivity and previous experience, we may be able to foresee potential issues that are not apparent to you as a family member. Thoughtful planning today can avoid painful consequences tomorrow.

Contact our Wealth Preservation team.