Protection of a PR

Question 1

Where PRs are unsure of their obligations / construction of the will is in question

Answer 1

• seek court directions
• make a s 48 AEA 1985 application to rely on a written legal opinion

Question 2

To avoid liability to an unknown beneficiary/ creditor who comes forwards after the estate has been distributed

Answer 2

notice procedure in s 27 TA 25.

Question 3

where there is a known but missing beneficiary/ creditor (4)

Answer 3

• Benjamin Order or
• taking out insurance or
• presumption of death act if it applies or
• payments into court

Question 4

Court guidance

Answer 4

• If PRs foresee difficulties in the administration (e.g., the construction of the will is ambiguous) and are concerned this may lead to them incurring personal liability (e.g., by making distributions to the wrong beneficiaries) they may seek court guidance.
• Administration proceedings could take the form of:
  o an administration action application to have the estate administered by the court.
  o specific relief: an application for guidance on a particular matter.
• Seeking court directions is expensive and time consuming

Question 5

what is a S 48 application

Answer 5

In cases where there is a question over the construction of the will, the PRs may instead make a s 48 application to distribute in accordance with a written legal opinion which the court grants permission to rely on. The opinion must be someone who meets criteria under s 48.

Question 6

what is S 27 notice?
when is it used?
process?
What protection does it afford?

Answer 6

• PRs who distribute the estate remain personally liable to unpaid beneficiaries and creditors, even if the PRs were unaware of their claim at the time of the administration s 27 notice can be placed
• S 27 only protects the PRs against claims of unknown creditors and beneficiaries:

o It will not protect PRs against the claims of those they knew existed but could not trace.
o It also does not protect other beneficiaries who receive more than their entitlement to the estate. A disappointed creditor/beneficiary may still claim against the beneficiaries.

• s27 does not protect PRs in their capacity as beneficiaries  unknown Bs can still claim from them
• The PRs must wait 2 months from the date of the notice to distribute – this involves putting a notice in the London Gazette AND a newspaper.

Question 7

what is a Benjamin Order?
When should it be used?
What protection does it allow?
What must PR do before it is granted?

Answer 7

PRs may distribute the estate on the assumption that certain events have or have not happened

• Examples:
  Benjamin Order permitting them to distribute the estate on the basis that the missing beneficiaries have died.

permit trustees to distribute the estate on the assumption that the missing beneficiary had no children.

• The order relieves the PRs from personal liability if they administer an estate in accordance with the court order and the assumption turns out to be incorrect.

Claim against B by b/c possible

• Before an order is awarded, PRs must make full enquiries to establish the true position and show that there is no reasonable prospect of knowing the true position without disproportionate expense

Question 8

what is the Presumption of Death Act?
How long must B be missing?

Answer 8

The PRs may make an application for a court order declaring that a person thought to have died, or not known to have been alive, for SEVEN YEARS or more has died (faster than Benjamin Order)

Question 9

Insurance

Answer 9

• PRs could purchase insurance to cover the risk that a beneficiary or creditor returns after administration is complete and claims against the PRs for the share they should have received.
• Disadvantage: it may not be possible to obtain insurance if the risk is too high + premiums are expensive (although are likely to be less expensive than seeking a Benjamin Order).

Question 10

Indemnity from beneficiary

Answer 10

• The PRs could seek an indemnity from the beneficiaries they can trace Bs promise to reimburse the PRs for any loss the PRs suffer as a result of being sued by a disappointed beneficiary or creditor.
• Disadvantages: An indemnity from the existing beneficiaries is only as good as the person giving it. Also, it may prove difficult in the future to trace those providing the indemnity

Question 11

Payments into court

Answer 11

• PRs could pay the legacy amount into court and distribute the balance of the estate. Although the person who would benefit from the share paid into court may not favour this option.
• While the purchase of insurance would be a preferable option re a missing beneficiary, a payment into court may be suitable where a beneficiary can be located but is refusing to accept their inheritance

Question 12

What is Exoneration by the court?
What section of the Trustees Act 1925?
Requirements?

Answer 12

• Under s61 Trustee Act 1925 a PR may apply to the court for an order exonerating them, in whole or part, from personal liability for breach.
• An order will not be made unless the court considers that the PR:
  a) acted honestly and reasonably,
  b) ought fairly to be excused for the breach of trust and for omitting to obtain directions of the court in the matter in which he committed such breach