Administration of the estate Flashcards
What happens if the PRs fall below or breach their standards?
They will be liable to the estate and to the beneficiaries
What are the duties of care/standards for PRs?
- not to commit an act of waste
- statutory duty under s1
- the fiduciary duty to the estate and beneficiaries
What happens if a PR is found liable on devastavit?
They are personally liable to make good any loss caused to the estate - they must pay it out their own pocket
Can liability for executors be excluded?
Yes if express wording in the will limits or excludes liability and if not the PRs can also argue they have acted honestly and reasonably and therefore ought to be excluded
What are a PRs powers of investment?
- PRs have the power to invest as if they were the absolute owner of the assets
- they must consider the standard investment criteria under s4 and review the investments from time to time
- they should obtain proper advice before exercising these powers
What must PRs do before distributing property to beneficiaries?
Pay off any debts and liabilities
How can PRs avoid the risk of being asked to pay any of the estate debts personally years after the estate has been administered?
The PRs may decide to advertise for creditors asking for any creditor with a claim to come forward. If this is done and no creditors come forward the PRs have no personal liability
What happens if there is not enough cash to pay off the debts but the estate is worth more than the liabilities?
The PRs have a general power to sell personalty and this extends to items that have been specifically bequeathed - if it is needed to settle debts the PRs can sell it
How do the PRs pick which items to sell if they need to raise funds to settle debts?
There is an order known as abatement:
- property not bequeathed
- residue
- any money specifically set aside to pay debts
- any legacy or devise to any beneficiary charged with the payment of debts
- money retained to pay pecuniary legacies
- property specifically bequeathed
- property over which the PRs have a general power
What happens if there is uncertainty over beneficiaries?
Three things can be done:
1. advertise their intention to distribute the estate
2. make an application to the court for a ‘Benjamin’ order
3. take out insurance in case of a missing beneficiary and they turn up
What is a ‘Benjamin’ order?
The application asks the court to order that the PRs should distribute the estate on the basis that the missing beneficiary predeceased the deceased. It completely protects the PRs if the missing beneficiary does return
Does the missing beneficiary lose their entitlement if a ‘Benjamin’ order is made?
No, if they return they could seek payment from the other beneficiaries for their share
