Rights of beneficiaries and Liabilities of personal Representatives

Question 1

How can a beneficiary prevent the issue of a grant if there are concerns about the validity of a will?

Answer 1

A caveat can be lodged at HMCTS to prevent the issue of a grant. This is typically done when there are disputes over the validity of the will, or if family members question the executor’s capacity. The caveat lasts for six months, but its duration can be extended. If the executor wishes to proceed, they can issue a “warning,” requiring the caveator to respond within 14 days. If the caveator does not respond, the grant can proceed.

Question 2

What can a beneficiary do if the executor delays applying for a grant?

Answer 2

Beneficiaries can apply to HMCTS for a citation to compel the executor to act. A “citation to take probate” is used when an executor has intermeddled in the estate (e.g., sold property) but has not applied for a grant of probate. If the executor fails to act after the citation, the court may pass over the executor and issue a grant of letters of administration with will annexed to another entitled person under NCPR 1987, r 20.

Question 3

What is a Citation to Propound a Will, and when is it used?

Answer 3

A Citation to Propound a Will is issued when a beneficiary believes a later will exists that could reduce their entitlement under an earlier will or intestacy. The person issuing the citation requests that the executors of the later will authenticate it by applying for probate. If the executors fail to act, the beneficiary may apply to the court for a grant as if the will were invalid.

Question 4

What is a Citation to Accept or Refuse a Grant, and what purpose does it serve?

Answer 4

A Citation to Accept or Refuse a Grant is used to clear off a person with a prior right to a grant (e.g., an executor or administrator) who has not applied and shows no intention of applying. If the cited person does not act, the grant can be issued to the beneficiary who requested the citation.

Question 5

What can a beneficiary do if an executor is unwilling to act or is causing delays in estate administration?

Answer 5

Instead of compelling an unwilling executor to act, beneficiaries can apply to the court under Section 116 of the Senior Courts Act 1981 for an order to “pass over” the executor. This allows the court to appoint someone else to administer the estate. For example, in Re Biggs (1966), an executor was passed over after refusing to manage the estate despite intermeddling.

Question 6

Do beneficiaries of an unadministered estate have an equitable interest in the estate’s property?

Answer 6

No, beneficiaries do not have an equitable interest in the property of an unadministered estate.

The legal and equitable interests are vested in the PRs (Personal Representatives).

However, beneficiaries have the right to compel due administration of the estate, including seeing the estate accounts and requesting information on how the estate is being managed.

Question 7

What rights do beneficiaries have regarding estate accounts during and after administration?

Answer 7

Throughout the administration, PRs must maintain accurate records of receipts and payments. Beneficiaries have the right to inspect these accounts. If PRs refuse or the accounts are unclear or inaccurate, beneficiaries can apply to the court for an order compelling the PRs to provide an inventory and accurate accounts under Section 25 of the Administration of Estates Act 1925. Final accounts are presented to residuary beneficiaries before distribution, and their approval releases PRs from further liability.

Question 8

What is the “Executor’s Year,” and how does it impact the distribution of the estate?

Answer 8

The “Executor’s Year” refers to the one-year period following the deceased’s death during which PRs are not obliged to distribute the estate. This allows PRs time to administer the estate without being pressured by beneficiaries. However, for straightforward estates, it is generally expected that the administration will be completed within this period.

Question 9

What actions can beneficiaries take if PRs breach their duties?

Answer 9

Beneficiaries may sue PRs for breach of fiduciary duty or devastavit (misuse of estate assets). PRs are fiduciaries, meaning they must avoid conflicts of interest and account for any unauthorized profits. Devastavit claims arise when PRs cause losses to the estate through negligence, misuse of assets, or maladministration. PRs found liable for devastavit must compensate the estate from their own resources.

Question 10

What defenses can PRs use against breach of duty claims?

Answer 10

PRs can rely on several defenses, including:

1. Section 61 Trustee Act 1925: The court may relieve PRs of liability if they acted honestly and reasonably.
2. Exclusion Clauses: Some wills contain clauses that modify the PRs’ duties or exclude liability.
3. Beneficiary Acquiescence: Beneficiaries who knowingly consented to a breach of duty cannot later bring a claim.
4. Section 27 Trustee Act 1925: PRs are protected from liability if they followed legal procedures, such as placing advertisements to locate unknown beneficiaries. However, this does not protect them against claims from known beneficiaries who cannot be found or successful family provision claimants.

Question 11

How can PRs protect themselves from claims by unknown or missing beneficiaries?

Answer 11

PRs can protect themselves from personal liability by placing advertisements under Section 27 of the Trustee Act 1925 to locate unknown beneficiaries.

If an unknown beneficiary later comes forward, they can only claim from the beneficiaries who wrongly received their share. For known but missing beneficiaries, PRs may seek a Benjamin Order or indemnities to safeguard against personal liability.

Question 12

What is the time limit for a beneficiary to bring a claim against PRs?

Answer 12

Beneficiaries have 12 years to bring a claim to recover their share of the estate, starting from when their right to the estate accrued. However, there is no time limit for claims involving fraudulent breaches of duty or where PRs take estate property for personal use.

Question 13

What can a beneficiary or creditor do if a PR distributes assets to someone who is not entitled?

Answer 13

The beneficiary or creditor may follow the assets into the hands of the recipient through two remedies:

1. Proprietary claim: The beneficiary may claim the assets (or their traceable proceeds) from the recipient unless they are a bona fide purchaser for value without notice.
2. Personal claim: The beneficiary may seek compensation from the recipient, provided all remedies against the PRs have been exhausted.

Question 14

Can Personal Representatives (PRs) be removed from their role?

Answer 14

Yes, PRs can be removed under Section 50 of the Administration of Justice Act 1985. The court has the discretion to remove or substitute PRs. Applications for removal can be made by PRs themselves or by beneficiaries. The court’s decision will focus on the welfare of the beneficiaries and must ensure that at least one PR remains in office.

Question 15

Can Personal Representatives (PRs) refuse or renounce their role after being appointed?

Answer 15

PRs can renounce their right to the grant before taking office, but once they have accepted and extracted the grant, they serve for life unless the court removes them

Question 16

What is the extent of PRs’ liability regarding the deceased’s debts?

Answer 16

PRs are responsible for all the deceased’s debts and liabilities, but they are liable only to the extent of the deceased’s assets. If they mishandle the estate (devastavit), they can be personally liable to creditors, meaning they would need to compensate creditors from their own resources.

Question 17

What are some examples of actions that could result in devastavit claims against PRs?

Answer 17

Examples of devastavit include:

• Paying a legacy before advertising for creditors, leaving insufficient funds to cover all debts.
• Failing to collect or preserve the deceased’s assets.
• Spending excessively on the deceased’s funeral.
• Paying debts of an insolvent estate in the wrong order.

Question 18

How can PRs protect themselves from personal liability to unknown creditors?

Answer 18

PRs can protect themselves by following the procedure set out in Section 27 of the Trustee Act 1925, which involves placing advertisements to locate any unknown creditors. This provides a defense if an unknown creditor comes forward after the estate has been distributed.

Question 19

When does the transition from PRs to trustees occur?

Answer 19

The transition occurs when PRs complete the administration of the estate, such as by paying debts and distributing assets. In relation to real estate, this transition is marked by the execution of an assent to themselves as trustees. For personal property (personalty), PRs become trustees automatically upon completing the administration.

Question 20

What are the key differences between Personal Representatives (PRs) and trustees?

Answer 20

Although both roles are fiduciary in nature, there are significant differences:

Trustees can retire, while PRs cannot retire without a court order.

The limitation periods for PRs and trustees differ. Trustees have separate rights and obligations under the Trustee Act 2000, whereas PRs are subject to rules of estate administration.