Probate and Administration - Claims Against PRs (8) Flashcards
What is a devastivit claim?
Devastavit Claim: Most commonly, PRs can be pursued in a ‘devastavit’ claim. This is typical where they have breached a fiduciary duty, including incorrectly distributing assets, failing to account for a debt, or using assets for personal gain.
Claim
Claim: Parties can pursue devastavit claims for breaches that have caused loss to the estate, or misapplied estate assets.
(1) Limitation Period: Claims must be brought within the limitation period.
Beneficiaries: Within 12 years of a beneficial interest vesting (unless fraud or theft).
Creditors: Within 6 years of grant (subject to protection by notice).
(2) Remedies: Personal representatives can be pursued via personal and proprietary remedies, and so can third-parties who have benefitted as a result (i.e. a beneficiary who has inherited more than their share).
Equity’s Darling: Claims cannot be brought against equity’s darling, but can against volunteers (Diplock).
Effect: Generally, the party accounts any unauthorised profit, or compensates any loss, to the estate. Relevant transactions are voidable within a reasonable time.
What are the defences and reliefs for a devastivit claim?
Defences and Relief: Personal representatives may be able to rely on a defence or court relief.
(1) Term of Will: The will may limit or exclude liability (other than for fraud or dishonesty).
(2) Consent: An adult beneficiary who consents to the breach cannot make a claim.
(3) Protection: The personal representative may be protected from personal liability (below).
(4) Court Relief: The court may relieve a personal representative for acting honestly and reasonably, provided it is fair to excuse them for breach as well as their failure to seek court guidance (s6 TA 1925).
>A will instructed the PRs to pay the testator’s ‘widow’. The couple had never been married, despite proclaiming to be. This was an honest and reasonable mistake, so the PRs were relieved (Re Gal).
How can PRs protect themselves against personal liability?
Protection from Personal Liability: There are a number of steps personal representatives should take to limit the risk of becoming personally liable to a third-party. This does not limit the liability of beneficiaries in any corresponding claims.
Unknown Parties
Unknown Parties: Claims may be made by unknown parties, such as an unknown creditor or an unknown beneficiary in a class of beneficiaries, such as a secret child. Protection can be sought as such:
(1) Notice: Notice of intention to distribute the estate should be placed in the following newspapers as soon as practicable, inviting unknown parties to claim against the estate within 2 months:
* The London Gazette;
* A Regional Newspaper (in the area of the deceased’s assets);
* A Foreign Newspaper (if the deceased had assets in that country).
*
(2) Protection: Personal representatives are personally protected after those 2 months.
Missing Parties
Missing Parties: Claims may be made by missing parties, such as a named beneficiary who has gone missing. Protection can be sought as such:
(1) Full Protection: Personal liability can be exempted by Benjamin Order, a court order that treats the missing party as dead for the purposes of distribution (Re Benjamin). This is expensive.
>Evidence must be provided to the court that the fullest possible enquiries to trace the party were made.
(2) Partial Protection: Personal liability can be limited by: a) retaining some estate assets; b) seeking indemnities from other beneficiaries; or c) taking out missing party insurance. However, PRs remain liable for any shortfall.
Statutory Provision Claims
Statutory Provision Claims: Claims may be made by aggrieved parties who believe that they are owed a larger provision from the deceased’s estate. Protection can be sought as such:
(1) Full Protection: Personal liability is removed 6 months after grant, meaning PRs should wait to distribute.
(2) Partial Protection: If earlier distribution is required, PRs should retain sufficient assets to meet any claim.
Why might administration be compelled?
Compelling Administration: Where PRs are performing poorly or slowly, they may be compelled by the court to distribute the estate properly. This is only permitted 1 year after death, and two such proceedings exist:
(1) Limited Issue: The court resolves a single issue, such as providing guidance on investment.
(2) General Administration Order: The court can make a ‘General Administration Order’, which can involve appointing a judicial trustee to administer the estate, alongside or instead of the PRs. This is very expensive.
How can inspection be compelled?
Compelling Inspection: Beneficiaries may be able to compel inspection of certain testamentary documents.
(1) Compellable Documents: PRs can be compelled to provide objective documents to beneficiaries, such as the will, a full inventory of assets and a schedule of investments (s25 AEA).
(2) Non-Compellable Documents: PRs cannot be compelled to provide subjective documents, such as a letter of wishes or reasons for investments.
>Beneficiaries may seek alternative methods, such as standard disclosure in a civil trial, or a GDPR request.
