Advice for beneficiaries in a Will when there is a dispute

Attwood Marshall Lawyers Estate Litigation Senior Associate April Kennedy joins Robyn Hyland on Radio 4CRB to discuss the different types of disputes and issues that commonly arise for beneficiaries in a Will and what to do when faced with these challenges.

Introduction

It is important to understand that if you are named as a beneficiary in a Will, you have certain rights in relation to your interest in the estate of the deceased person. Many beneficiaries are unaware that they have any rights at all.

Beneficiaries are sometimes drip-fed information, and it is only when months, or sometimes years, have passed after losing a loved one that those left behind realise that there is something amiss.

If beneficiaries are faced with these types of challenges, the good news is that there are options available to ensure their interests are protected, and the wishes of the deceased are fulfilled. Many beneficiaries feel powerless and are told the executor makes all the decisions for the estate. However, it is also the executor’s duty to preserve the assets of the estate on behalf of the beneficiaries and to act reasonably, including providing information. We have some tips to avoid some of the conflict.

What are the rights that beneficiaries have in relation to an estate?

A beneficiary’s right to information about the estate aligns with their entitlement under the terms of the Will. For instance, if a beneficiary is left a specific gift in a Will such as a house or real estate, they are entitled to information concerning that house or property.

The type of information they may request can include:

• the value of the property
• the state of the property
• copies of rates and water notices, and insurance policies, etc.

That same beneficiary is not entitled to information about any other assets of the estate. For example, they are not entitled to information about the cash in the bank accounts, shares, or motor vehicles. It is limited to their specific gift or legacy.

However, if a person has been named as a residuary beneficiary, they are entitled to a broader range of information in relation to the assets and details of the estate because every transaction and every dealing by the executor directly affects their entitlement from the estate. A residuary beneficiary is someone who has been left a share of or the whole of the estate assets.

For example, a residuary beneficiary is entitled to receive:

1. full estate accounting, including the incomings and outgoings of the estate;
2. copies of the deceased’s bank statements;
3. shareholding documentation;
4. invoices and receipts for any transactions undertaken by the executor;
5. insurance policies, valuations and property appraisals;
6.  mortgage, liability, or the deceased’s debt documentation.

In general, a beneficiary has a right:

1. To be notified about their entitlement from the estate of a deceased person
2. To receive a copy of the Will, and any prior Wills.
3. To information about the estate, and the steps that are being taken to progress the administration of the estate.
4. To be informed about any claims made against the estate or about any litigation that the estate is involved in.

Can an executor refuse to provide a beneficiary with a copy of a Will?

There are provisions set out in each state and territory’s legislation which outline who is eligible to inspect the Will. For instance, anyone who is named in a Will, or named in a previous Will, or the deceased’s next of kin such as a parent, guardian or spouse, are entitled to inspect the Will.

In order to inspect a Will, you will need to prove your identity and show how you are an eligible person under the Succession Act.

If the executor has refused to provide a copy of the Will, an eligible person can make a formal written request to the executor or to the executor’s solicitor. This alone can sometimes achieve a positive outcome.

If a formal written request has been unsuccessful in obtaining a copy of the Will, the next step is to obtain trusted legal advice from an experienced estate litigation lawyer who can help you understand what options you have available for you to move forward. This may entail bringing an application to a Court.

What happens if the beneficiary cannot locate a copy of the Will?

Unfortunately, if you cannot locate the Will, it can make things very difficult. There is no requirement to register a Will with a government body which means there is no central Will register where you can search for the document.

You can begin your search for a missing Will by making independent enquiries such as:

• Contacting the deceased’s solicitors or local solicitors in the area the deceased lived who may have been engaged to draft their Will.
• Searching through the deceased’s paperwork and documents to see if they held a copy of their Will or if you can locate any previous Wills that may have been in their possession.
• Contact the Public Trustee to see if they have record of the deceased’s Will in their Will bank.
• Check with the bank of the deceased to see if there is a security packet.
• Advertise in the local newspaper.

It can be very difficult to locate a Will if the deceased did not engage a solicitor to prepare the Will for them. This is often the case when someone uses a DIY Will kit and hides it away in a draw at their home with no other records or copies of the document.

If someone is left a gift in someone’s Will, when can they expect to receive their entitlement?

If a beneficiary has been left a gift in a Will, they generally should expect to receive their entitlement within 12 months from the date of death. This is referred to as the executor’s year.

The executor has a duty to administer the estate and distribute to the beneficiaries as soon as is practical.

If a beneficiary does not receive a specific gift within 12 months of the date of death, interest will then begin to accrue on that gift. That interest must be paid from the residuary estate. The beneficiary can also make an application to the court to compel the executor to hand over their gift/legacy.

Unfortunately, this does mean that the beneficiary will become involved in court proceedings in order to get what they are legally entitled to.

In many cases, when you put the estate, or executor, on notice of your request to receive your legacy, the executor is usually inclined to hand it over without the matter escalating further.

What to do if you are unhappy with the conduct of an executor

It does take time for an executor to administer an estate so it is important to have realistic expectations as to when you should receive any gifts that have been left to you in someone’s Will. For instance, it can take time for the executor to investigate the assets and liabilities and make enquiries as to the deceased’s personal and financial situation.

Generally, an executor should be allowed a reasonable period of time after the date of death to take steps to administer the estate and fulfil their duties. Obtaining a grant of probate can take approximately three – six months from date of death.

As a beneficiary, it can be helpful to seek advice early on after a loved one has passed away to make sure that you’re aware of what information you are, and are not, entitled to, and to gain an understanding as to the timeframes that are involved in the administration of an estate.

If the executor, or the executor’s solicitor, is not forthcoming with information despite your requests, then it is important to discuss the matter with an experienced estate litigation lawyer at the earliest opportunity.

Read more: Executors behaving badly – how should an executor conduct themselves

Types of disputes that commonly arise involving beneficiaries

Executor and beneficiary disputes

Disputes between beneficiaries and executors are very common. The most common dispute involves the executor not providing the beneficiary with any information. For example, an executor might withhold a copy of the Will, or information regarding the assets and liabilities of the estate, or updates to the beneficiaries as to what steps they are taking to deal with the assets and liabilities.

This is a dispute that can be easily resolved, but understandably adds stress and frustration to the beneficiaries, often who are already grieving and navigating an extremely stressful time in their life.

There are also instances where the person who has been appointed as the executor does not have a good relationship with the beneficiary/s and they use their position as executor to their benefit and withhold information out of spite or simply to be difficult.

Beneficiary and Trustee Disputes

Disputes between beneficiaries and trustees are also quite common. Not all estates are left to the beneficiaries and provided to them personally. In many cases estates can be left to beneficiaries within a trust, otherwise referred to as a testamentary trust. Usually when a trust is created in a Will, it is at the discretion of the trustee to distribute the estate to the beneficiaries.

There may be a class of beneficiaries that are entitled to those assets, but the beneficiary may not be the trustee of that trust. That means there is a third party that is essentially authorised to distribute assets to them.

In these situations, the trusts are usually discretionary, so a trustee can use their discretion to distribute assets to the beneficiaries, and they may have different views as to how the assets should be distributed amongst the beneficiaries. A trustee may for whatever reason use their discretion to distribute to one beneficiary and not another.

When the beneficiary does not have control over their own inheritance, they may not agree with the choices made by the trustee and disputes can arise.

Disharmony amongst beneficiaries

Sibling rivalry is not uncommon when it comes to inheritance disputes. One beneficiary may have been left more in the estate than another beneficiary. The discrepancy between equal shares of an estate can cause disharmony between beneficiaries.

In these scenarios, you may see a family provision claim by the beneficiary who feels they have not received adequate provision in the Will.

Disputes can also arise over the validity of the Will if one beneficiary feels another beneficiary coerced or unduly influence the deceased to draft their Will in a certain way at the time it was executed.

Executors that are also beneficiaries

Disputes can arise when an executor is also a beneficiary of an estate and stands to benefit from certain decisions they make, or from selling certain assets.

A few examples where these issues can arise include:

1. When an executor (who is also a beneficiary) lives in the estate property. The executor may want to remain in the property for as long as possible (usually rent free). They might deliberately delay the finalisation of the estate so that they can remain there – and use the estate funds to pay rates, water, insurance, electricity etc.
2. An executor who wants to buy the estate property because it is sentimental, or they want to keep it in the family – but they want to buy it cheap or less than its market value. The COVID-19 pandemic has unexpectedly caused the value of some properties to increase substantially. This may mean that the price that the executor may have in mind to purchase the property may be substantially less than what that property is now worth in the current market. An executor may not be able to afford the property in the current market so they might delay the administration of the estate to give them time to find finance or explore options to obtain a loan, etc.
3. An executor who uses the estate funds as their own. They have the authority and ability to access the deceased’s personal bank accounts, so they may use those funds for themselves, creating a conflict of interest.

Tips to avoid disputes arising between a beneficiary and executor

Tips for the person making the Will: If the Will-maker wants to avoid their beneficiaries becoming involved in disputes or avoid the beneficiaries arguing with their chosen executor, they must choose the right executor. There are a few things to consider when choosing the most appropriate person to be your executor, including:

• Personality – Personality traits are one of the biggest contributing factors to consider if you want to avoid disputes from arising. When choosing an executor, you need to ask yourself;
  • Is your executor reliable?
  • Do they act responsibly?
  • Are they competent?

A Will-maker should consider the executor’s intellectual abilities, emotional resilience, integrity, honesty, and trustworthiness, and their ability to remain impartial.

• Geographical location – the location of your executor is important. We do not recommend choosing an executor who is located interstate or overseas as this may delay the administration of the estate and incur unnecessary costs. For example, obtaining a Grant of Probate is a court procedure, and court documents can only be signed by certain persons, and the original documents must be signed, returned and physically filed with the Court;
• Age – we recommend choosing someone who is over 18 years old. It is also more practical to choose someone who is younger than you to safeguard against your executor losing capacity or passing away before you.

Tips for the executor: Communicate with the beneficiaries. Be transparent. Most disputes occur when the executor withholds information or isn’t forthcoming with information. Avoid disputes from arising by communicating effectively with beneficiaries at the earliest opportunity.

Tips for the beneficiary: Get advice from a solicitor experienced in estate administration and litigation and take steps to ensure you are aware of your rights and entitlements. Don’t let things drag on because you aren’t familiar with the process. Most solicitors offer a complimentary initial consultation so that you can find out where you stand and understand your rights at the very start. Take up that offer and keep yourself informed.

Attwood Marshall Lawyers – Helping people resolve estate disputes

Attwood Marshall Lawyers have one of the largest and most experienced estate litigation teams with senior lawyers who practice exclusively in this complex area of law.

Our lawyers are here to help resolve estate disputes effectively and to protect the wishes of the deceased, while at the same time ensuring you receive your entitlements as a beneficiary. We do our best to reduce the costs to the estate and resolve conflict at the earliest opportunity.

To discuss any disputes over Wills and estate matters, whether you are the executor of an estate, a beneficiary named in a Will, or a trustee of a testamentary trust, our estate litigation lawyers can help you understand your rights and what steps to take next to resolve your matter. Contact Estate Litigation Department Manager, Amanda Heather, on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au, or call our 24/7 phone line any time on 1800 621 071.

You can visit our experienced team at any of our conveniently located offices at Robina Town Centre, Coolangatta, Kingscliff, Brisbane, Sydney, or Melbourne.

Read more:

Timeline of a Family Provision Claim (Contesting a Will)

Undue influence and unconscionable conduct in Will-making is elder abuse and is a serious issue

Defending a Contested Will: Your Role as Executor

What are the rights of beneficiaries?