Attwood Marshall Lawyers Estate Litigation Special Counsel Lucy McPherson joins Robyn Hyland for Law Talks on Radio 4CRB to discuss the steps individuals can take when faced with an executor of an estate who may not adequately fulfil their duties. Selecting an executor is a crucial decision during the Will-making process, and ensuring the right person takes on the role is essential.
An executor’s responsibilities
An executor’s responsibilities are far-reaching, and it can be challenging to define the complete list of responsibilities beyond the immediate steps an executor must take to administer an estate.
Essentially, the executor takes on the role of the deceased person until the estate administration is complete.
Following someone’s passing, the executor will need to handle:
- funeral arrangements and body disposal
- applying for a grant of probate or administration
- investigating, identifying and calling in all assets of the estate
- securing assets of the estate
- settling outstanding expenses or debts
- keeping accounts
- carrying out the deceased’s wishes as specified in their Will and according to law.
The executor must administer the estate without unreasonable delay and promptly communicate with the beneficiaries about their entitlement.
During this process, an executor may become aware of the potential for disputes to arise. Such disputes could involve the executor taking legal action on behalf of the estate, whether trying to recover assets that belong to the estate or defending the estate against a legal claim.
At the cornerstone of executor duties and responsibilities is the fiduciary relationship between an executor and the estate’s beneficiaries. The paramount consideration in attending to these duties is that everything done must be measured against what is in the estate’s best interests.
Executors misbehaving – what constitutes unacceptable behaviour in the eyes of a court?
Waiting for the estate’s administration can be distressing for family members who have lost a loved one as they yearn for closure. The last thing families want is to be entangled in legal disputes with the executor over unfulfilled duties, prolonging the administration process unnecessarily. Regrettably, such cases are not uncommon.
If a person with legal standing makes an application, the court can remove an executor who is not fulfilling their role appropriately.
When determining unacceptable behaviour, the court’s primary consideration is whether the executor’s conduct has jeopardised the proper administration of the estate.
Some examples of what constitutes unacceptable behaviour are:
- A conflict of interest that has caused, or is likely to cause, “mischief” at a reasonably high level of seriousness;
- Unreasonable delay in administering the estate and neglect or mismanagement;
- A dispute or disagreement between co-executors that has developed to the point where the due administration of the estate has been placed into jeopardy;
- Strained family relationships (including between executor/beneficiary and between co-executors) contributing to delay and increased costs;
- Where a named executor has received significant assets from the testator shortly before the testator’s death without having paid valuable consideration, where there was going to be a question of capacity of the deceased at the time of the transactions, and where litigation was almost inevitable;
- A dispute between co-executors concerning the interpretation of the Will led to the stalling of the administration of the estate;
- Where a named executor did not have the capacity to act in the role, is incarcerated or is a minor;
- Misconduct is a valid reason for removing an executor. However, it’s important to note that an executor can be removed even without a finding that they are not a fit and proper person to carry out their duties. Removal may occur even in cases where there is no evidence of misconduct on the part of the named executor.
An example case: removing an executor who failed to administer an estate
In the case of Newman v Predo [2022] QSC 170, the executor, the daughter of the deceased, had been appointed sole executor and trustee of her mother’s estate. The executor was one of eight children and stepchildren who had been left a reasonably straightforward estate, with the principal asset being a home in Bribie Island.
Following her mother’s passing, the executor, although accepting her role, failed to administer the estate, and for over three and a half years, she let the Bribie Island property sit vacant while the other beneficiaries wondered what was going on.
One of the beneficiaries applied to the Supreme Court to have the executor removed.
The beneficiary accused the executor of:
- Failing to prepare and lodge tax returns for the estate over three financial years.
- Failing to obtain a valuation and sell the property, which sat vacant.
- As a result, the property was likely going to attract capital gains tax which would need to be paid once the property was eventually sold, a liability that could have been avoided if the property was sold within two years of the deceased’s death.
- Failing to secure appropriate qualified legal help to assist in administering the estate.
- Failing to provide a proper account of the estate despite several requests for such information by the beneficiaries.
- Displaying conduct that showed she was unsuited to perform the duties of the executor.
As a result of her conduct and failure to preserve the estate and avoid unnecessary legal costs, the court ordered that the grant of probate issued to the executor be revoked.
Letters of administration were then granted to an independent solicitor experienced in estate administration matters to act as administrator.
In this case, the court recognised the necessity of the application made by the applicant, as it served the interests of all the beneficiaries. It was deemed unfair for the applicant to bear the costs of initiating the application. Consequently, the court ordered the executor to cover a portion of the applicant’s costs, with the remaining amount to be paid from the estate.
Read more: Neglectful executor fails to distribute mother’s estate and is replaced: Newman v Predo
Public Trustee as your executor – a warning call
The Public Trustee is widely recognised for their Will-making services, which often come with a strong push to utilise their executor services by appointing them as the executor in your Will.
The Public Trustee boast about the benefits of appointing them as your executor on their website, claiming that by choosing such services, you will benefit from experienced, compassionate, and empathetic staff, along with competitive fees.
Several cases have been bought against the Public Trustee, alleging that they failed to preserve estates or distribute assets promptly, while charging exorbitant fees that exceed what other professionals would charge. These practices have resulted in harm to many individuals and their estates.
In a 2022 case, the husband of a deceased woman received an unexpectedly high bill of over $19,000 from the WA Public Trustee for their services in administering his wife’s estate. The main tasks involved were transferring bank accounts and shareholdings to his name, which should have been straightforward. However, the Public Trustee billed excessive hours for these simple tasks, even though the estate was modest.
We have encountered other situations where we believe the Public Trustee over-serviced and overcharged certain estates. As a result, the burden falls on grieving loved ones to contest these fees and attempt to appoint a different administrator, which can be a difficult and unpleasant process.
Read more: Public Trust Office Removal – if the public system has let you down
The process to remove a “bad executor”
When a beneficiary believes that an executor is not fulfilling their duties correctly, acting with a conflict of interest, or behaving improperly, they can apply to the court for the executor’s removal.
Additionally, if it becomes apparent before the court issues a grant of Probate that the chosen executor is unsuitable, an application can be made for the executor to be “passed over”. This means the named executor will not receive a grant of administration, and the court will usually appoint another executor or party to handle the estate administration.
Voluntary renunciation
An executor who does not wish to take on the role upon the Will-maker’s death can renounce their position before an application is made to the Supreme Court for a grant of Probate . If an executor has already accepted the role and begun intermeddling in the estate but can no longer fulfil their duties and wants to cease acting as executor, they must seek permission from the court. This situation may arise when there are co-executors with irreconcilable different that disrupt the proper administration of the estate.
Involuntary renunciation
On the other hand, if an interested party wishes to remove an executor after a grant of probate has been issued, they must file an application seeking the revocation of the grant and the issuance of a new grant of administration with the Will annexed to a proposed administrator.
This would usually happen on the grounds of some form of breach of duty, misconduct, or neglect.
The court has jurisdiction to revoke a grant in each Australian jurisdiction.
Additional or consequential orders sought such as orders for the payment of an occupation fee (if the executor has occupied an estate property against the terms of the Will), directions for specific actions in the estate administration, orders for accounting, filing for accounts, transfer of property, and costs, may also be sought.
Plan ahead: alternatives to be aware of when doing your estate plan
Choosing an executor for your Will is a crucial decision with numerous considerations. Estate administration can be time-consuming and complex, making it vital to select someone capable of handling the responsibilities efficiently. An executor must not simply be able to handle the usual duties such as seeking a grant, calling in assets, etc., but must also be confident to act in the best interest of the estate and deal with a raft of issues that could arise, including disputes.
The suitability of the chosen executor depends on various factors, such as family situation, estate specifics, and instructions provided. Many people opt to appoint a professional, such as a lawyer or accountant, to serve as an executor and leverage off their expertise, impartiality, conflict management skills, and legal knowledge.
Appointing a solicitor as an impartial executor is a natural choice, as they possess the necessary skills, including financial management and communication abilities, to effectively handle the role.
Another option is to appoint a private trustee company as an independent executor. Similarly, to solicitors, a private trustee offers objectivity, experience in estate administration, and additional financial and taxation services.
Choosing the right executor is vital to avoid potential problems during estate administration.
Attwood Marshall Lawyers – leaders in estate litigation
Attwood Marshall Lawyers have one of the largest and most experienced Wills and Estates departments in Australia. Our lawyers specialise exclusively in this area of law and can:
- Help executors understand their duties and perform their role
- Remove executors who are failing to properly administer an estate
- Resolve disputes with the Public Trustee in relation to estate administration matters
- Resolve disputes between executors, administrators, and beneficiaries
If you need guidance concerning an estate litigation matter, please call our dedicated team today by contacting our Estate Litigation Department Manager Amanda Heather on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071.
Our lawyers are available for appointments at all our conveniently located offices at Robina Town Centre, Coolangatta, Southport, Kingscliff, Brisbane, Sydney, and Melbourne.
