Attwood Marshall Lawyers Wills & Estates Partner Angela Harry joins Robyn Hyland on Radio 4CRB for “Law Talks” and discusses the repercussions that unfold when multiple individuals are appointed as executors of a person’s Will and end up at odds and unable to find common ground on crucial decisions concerning the estate.
Stepping into the role of executor
An executor’s role is known as a trustee or fiduciary role. Their function is to administer the estate and carry out the Will-maker’s wishes in accordance with the terms of the Will.
It is a demanding job, especially if there is a conflict between co-executors or the executors and beneficiaries do not get along, which unfortunately appears to be an increasingly common occurrence.
Among other tasks, the executor’s primary responsibilities include:
- arranging disposal of the body and organising the funeral
- preserving the estate assets,
- applying for a grant of probate;
- identifying liabilities and attending to payment, including taxation obligations;
- defending claims made against the estate; and
- distributing the assets to the beneficiaries.
How many executors can you appoint in a Will?
Depending on your State or Territory, the number of executors you can appoint in your Will can vary. In Queensland and New South Wales, you are limited to appointing up to four individuals to act as executors.
Appointing multiple executors in a Will is frequently preferred by parents with several adult children. Parents may nominate their adult children as joint executors, assuming this choice reflects an equitable approach. By affording each individual a voice in the decision-making process, parents aim to ensure fairness. However, such decisions often overlook underlying tensions or strained relationships among siblings.
Frequently, the inability to reach a consensus among co-executors results in disputes, and differing viewpoints on estate management and asset distribution can introduce substantial delays in the estate administration process and additional costs for the estate.
Depending on the family dynamics and how everyone gets along, sometimes it can be better to have an independent person act in the role, whether that be a close friend or family member who is not a beneficiary or a professional such as a lawyer or accountant.
Common disputes that arise between co-executors
As the dynamics of co-executors unfold, a variety of common disputes often emerge.
Here are some common challenges that frequently confront co-executors and beneficiaries:
- Where an executor is not carrying out their duties efficiently or promptly, to the detriment of the beneficiaries,
- Disputes over the value of assets,
- Differences in opinion about which assets should be distributed to which beneficiaries,
- Where an executor prioritises their interests over the beneficiaries.
- Conflict about how the deceased’s real property should be dealt with, particularly when an executor wishes to retain a property.
In the above scenario, there may be multiple beneficiaries (usually children), each entitled to a share of a property as per the terms of a Will. At the same time, the executor (who is usually also a beneficiary) wants to keep the property and proposes to buy the property from the estate instead of selling it and distributing the funds.
It is common for beneficiaries to have differing views about whether the executor should be able to purchase the property, if it should be sold, or what the agreed value should be.
These can be very sensitive and tricky situations for an executor to navigate since they bear the responsibility to act in the estate’s best interest (which includes not preferring their interests or benefiting themselves) while simultaneously holding a personal interest as a beneficiary.
Navigating conflict of interest when an executor wants to purchase property from an estate
Executors must act in good faith and must not deal with property they are entrusted with for their benefit or otherwise profit from the trust.
An example of this is the “purchase rule” or the “self-dealing rule”, which prohibits executors and administrators, and their associates, from purchasing estate property (even if for proper value) except as authorised by the terms of the Will or by the court, or with the consent of all the beneficiaries.
The rule against self-dealing is steeped in law. There is a case from 1911 (In the Will of Greer (1911) 11 SR (NSW) 21 at 22), where an executor (referred to as “G” in the judgment), with the concurrence of his co-executor, purchased part of the estate at auction and the judge found that:
“…. There [could] be no doubt that [G] placed himself in a position in which his interest conflicted with his duty. As vendor his duty was to obtain the highest price obtainable, whilst as purchaser his interest would lead him to endeavour to purchase at as low a price as possible. In assuming the dual role of vendor and purchaser he disregarded one of the most important rules by which the conduct of a person occupying a fiduciary position should be regulated.”
Generally, if an agreement cannot be reached between the executor who wants to purchase the property and co-executors or beneficiaries, then the executor will be prevented from the purchase. To maintain that position would be to place themselves in a position of conflict which could see them removed as executor.
When disputes cannot be resolved without legal recourse, it almost always adds to the legal costs for the estate, not to mention extended delays in progressing the proper administration of the estate and added stress to all interested parties.
Steps for executors and beneficiaries to resolve disputes over property
To resolve a dispute over an estate property, executors and beneficiaries should:
- Seek independent legal advice from someone specialising in estate law and dispute resolution.
- Obtain multiple valuations of the property to ensure the proposed purchase price is not less than market value and is in the best interests of the beneficiaries.
- With independent solicitors acting for the estate, and then for each executor, it can help negotiate a resolution and move forward, which may involve participating in a mediation or conference to resolve the issue (although this can be costly).
- If an agreement still cannot be reached throughout this process, it may be that the matter needs to go to the court for directions.
These are complex scenarios for families who are already grieving the loss of a loved one, and to then be involved in protracted legal disputes over the estate cannot be easy for anyone involved.
Strategies a Will-maker can put in place during the estate planning process to mitigate the risk of disputes arising
Several strategies can be implemented during the estate planning process to minimise potential conflicts.
One option is appointing an independent third-party executor, such as a professional trustee or lawyer, who can handle the estate’s affairs impartially.
Additionally, Will-makers can include specific instructions about how they want conflicts to be resolved or give the executor the discretion to sell assets, including the family home, to avoid deadlock situations. A Will-maker may also include an option to purchase for a particular family member they know has an attachment to a property, which would include a mechanism for valuing the property to avoid a dispute.
These are examples that Will-makers should consider when drafting their Will to mitigate the risk of disputes arising and ensure that they do not escalate to the point that a court needs to step in to resolve the matter.
Advice for people stepping into the role of executor
Taking on the role of executor is a task that many people underestimate. It can be an emotional and overwhelming job, especially if complex family dynamics are at play and you are dealing with a grieving family.
Here are a few essential tips to ensure the process runs smoothly:
- Ensure you thoroughly understand the Will and specific instructions that have been left, including any provisions that have been made as to how to resolve a dispute if one does arise.
- Communicate effectively with co-executors and beneficiaries. Keep everyone informed about the estate administration progress and the decisions being made. Open and transparent communication can help minimise misunderstandings and disputes.
- Act impartially. If you are named as executor but are also a beneficiary in the Will, make sure you make decisions objectively and always act in the best interest of the estate and all its beneficiaries.
- Lastly, don’t feel that you must go it alone. Seeking professional advice and support is not a sign of weakness or incompetence. Executors can significantly benefit from the support of experts who can help guide them through estate administration’s legal and financial intricacies. A professional can help executors carry the burden and ensure that executor duties are fulfilled diligently while effectively diffusing any tensions that may arise between executors and beneficiaries.
Attwood Marshall Lawyers – Leading Wills & Estates Law Firm
Attwood Marshall Lawyers has one of the largest and most experienced Wills and Estates departments in Australia, with dedicated teams who practice exclusively in estate administration, estate planning, and estate litigation.
We can support executors in their roles and help them navigate the many obstacles that often arise during the administration process, including helping executors and beneficiaries resolve disputes.
If you would like to discuss an estate or obtain advice about acting as executor, please get in touch with our Wills and Estates Department Manager Donna Tolley on direct line 07 5506 8241, email firstname.lastname@example.org or book an appointment instantly using our online booking app.