Brisbane’s Legal Lowdown: Removing an executor who is delaying the administration of an estate

Sofie: Look, it’s time now for us to get our Brisbane legal lowdown with Attwood Marshall Lawyers, and today we’re diving into an issue that, sadly, will affect many families during what would already be an incredibly difficult time.

And all day, as I’ve been preparing to chat to Duncan about this, I’ve been talking about this idea of what happens when an executor named in a will isn’t doing their job properly. I said to Duncan when he walks in, well, if the executors of my will are not doing their job properly, I’m not going to be around to know about it. So, what does this mean?

Well, it might be delays, it might be communication, it might be mismanagement, a variety of things. To help us understand how executors can be held accountable, for everyone else who may be beneficiaries of a will, and what you do in that situation, we’re joined again by Attwood Marshall Lawyers Estate Litigation Senior Associate, Duncan MacDougall. Good afternoon to you.

Duncan: Thanks for having me again.

Sofie: I won’t know whether or not my executor’s doing what I want or what my wishes are will I?

Duncan: Unfortunately, not. And the unfortunate bit is that it’s going to come down to the beneficiaries starting to take action to hold them accountable. We have too many instances where executors are just not getting the right advice. They’re trying to do things themselves, which really they don’t, not having that full understanding of their roles and responsibilities whilst managing the estate, is when issues start to creep up.

Sofie: Alright, let’s start with that, then. What are the responsibilities of an executor named in a will?

Duncan: Yeah. So, they’re really the ones who are really stepping into your, you’re no longer here, so, they’re the ones stepping into your shoes when you pass away.

They’re going to be the ones responsible for managing your estate, the trustee of your estate. So, calling in all of the assets, holding everything on trust on behalf of the estate, paying any existing debts, tending to any taxation affairs and then arranging distribution to the beneficiaries.

Sofie: Are they often more than one person named in that role?

Duncan: There is, there is and then you can appoint up to four people under a will acting jointly.

Sofie: Better or worse?

Duncan: Too many cooks in the kitchen, as they say sometimes, and that’s the advice, especially when during the estate planning stages, a lot of time Mum and Dad say, well, I just don’t want to exclude anybody. So I’ll just do all the kids when really there’s going to be some…

Sofie: Pick your favourite child.

Duncan: Pick somebody who you know well and trust to do the right thing, to do the job, and just get the job done.Not going to be causing the grief and the drama associated with siblings.

Sofie: And I guess that’s probably in seriousness a spot to stop just a little longer. If we now know what the responsibilities of the executor are, how do you best go about choosing that person or people?

Duncan: I think that’s going to be making sure you do get your estate planning affairs in order. That’ll be a conversation you’ll have with your solicitor. As to say whether it be a sibling, whether it be a son, daughter, a collection of them. Many people may not even be in that situation, so maybe the case where they appoint, for example their solicitors in that more independent role, somebody who’s removed from all the family drama who can manage it appropriately.

Sofie: Does that happen often, where somebody will get somebody who’s outside of the family, not a friend, you know, just use the legal system to be able to find somebody who you know will find a group because you don’t know who that exactly is going to be? In your case, if the executors are Attwood Marshall Lawyers, there’ll be somebody appointed to execute the wishes that are in that will.

Duncan: Correct. And it’s generally when you’ve got some heated estates or maybe even large estates where they can anticipate issues down the track and siblings really is the one that that they don’t get along, or it’s just the managing of those funds, really.

Sofie: Okay, so let’s say it happens, and you are in a situation where an executor is behaving badly, to put it in some way, what rights do beneficiaries have if an executor is delaying or mismanaging the estate?

Duncan: It’s one of these issues that’s just one of the biggest things across my desk now is that very thing, is executors just not doing the right thing.

They’ve got a fiduciary duty to the estate and to the beneficiaries. So, they get into this position of power, I can sign the dotted line at the end of the day, I decide what happens. You’re just a beneficiary. A lot of times it’s withholding information, not disclosing what’s happened in terms of the estate, not taking appropriate steps in a timely manner as well getting that grant of probate.

So, there’s issues where beneficiaries can then take a step forward to say to account for them to disclose this information and if they’re not they can then take steps to get them removed if it gets to that point.

Sofie: I imagine there are many cases where the executor is also a beneficiary?

Duncan: Very much so. And that’s again a situation where if it becomes really contentious, there can get into a bit of a position of conflict, whether it be because of that very reason where they’re mismanaging funds in some way, where they’re wanting to receive a benefit personally, it may not be acting in the best interest of the estate, in which case an independent person would be more appropriate for the role.

Sofie: Can an executor be removed through this process and what does that mean?

Duncan: Yeah, so that would be generally trying to resolve the issues before that. So generally, the beneficiaries would get some legal representation to try to guide them, and then generally if they get a letter from a solicitor, they’re going to eventually go to seek their own legal advice.

But if it reaches that stage, there is an application that you can make to the court to have that person removed and the appointment of an independent administrator.

Sofie: I guess the other really important issue here is what do we do if we’re in that process now of making a will, so that you anticipate these kind of disputes potentially happening in the future and mitigating them wherever you can?

Duncan: I think that’s just going to be conversations that you’ll have with your solicitor as well to see who the best person to appoint? How that’s actually going to play out and the roles and responsibilities that they’re going to actually end up doing for you. Because a lot of things people will just say it’s just a formality when really it’s a big job and the biggest thing for people to do is have that open ended conversation. I say transparency to your loved ones now is going to create less tension down the track.

Sofie: Yeah, that’s true. I still think too there’s a real perception that it’s only rich people who need to worry about this. And what does that mean? But I think there’s a real feeling that unless you’ve got a lot, you don’t need to worry.

Duncan: Yeah, well, unfortunately with this, especially if you’ve got executors, even if you’ve got multiple executors butting heads, they may still be in that role, but they’re all of a sudden getting separate legal advice as well. So, they’re up with two sets of costs. The estate might be nominal at the end of the day, you’re running an estate here where it’s going to be just chewed up in legal costs. And that’s the last thing you want.

Sofie: It is often the case, and no disrespect intended, that the people who benefit most out of these situations are the lawyers where we know that that is just something to that is true? Can you give us an example of something that you’re working through at the moment just to give us an indication of the real-world example?

Duncan: Yeah, well, I’ve got one just recently where it’s got five beneficiaries. We’ve got one executor, and he’s an independent person completely removed from the family dynamics. They’re just wanting their money at the end of the day. They’ve gone through five separate lawyers. We’re finally getting to a point of a distribution, but they’re in the mountain of legal cost at that stage and it’s a bit of a weigh up whether or not you do take these steps to get them removed, because it’s not a cheap process to get the executor removed. And it’s a cumbersome process where you’re going to need a lot of evidence to get them removed.

Sofie: And this person is independent and I know you’ll have to be careful about what you say. Why are they holding it up?

Duncan: It’s a power play and them not getting advice, so they’re in the parole where I don’t need legal advice, I know what I’m doing.

Sofie: Wouldn’t it be fascinating if you could do like a reality TV show? Because I’m fascinated, like when today there was the repeat of like the ambulance shows or like RBT or whatever, if you could do one inside a lawyer’s office, fly on the wall stuff, of this unfolding in real time.

Duncan: And every situation is different. Every family is different. So, you hear all the sorts of family drama that goes into it. And I feel for everybody. And I feel for the beneficiaries because at the end of the day, they just want what was best for Mum and Dad. They want to honour that will that they left. The problem is when you get that executor not doing the right thing, it’s just going to create issues.

Sofie: Well, it can be just something for everyone to be thinking about and certainly not something that you put off. It’s one of those things I think at the moment, Duncan, that we’re reminded that it’s not until you really need it that you go, I wish I had you know, when it comes to these issues of estate planning.

Thank you. As always, Duncan MacDougall, Attwood Marshall Lawyers Estate Litigation Senior Associate. We do the legal lowdown every week here on 4BC Afternoons. And if something pops up that you would like us to talk about, you can always send it through to afternoons@4bc.com.au.

Even of course, knowing that it’s general in nature, it just might be something that helps you have that conversation with your family. Thanks. Duncan.

Duncan: Thanks for having me.