When a person dies the executor of the deceased will has a number of very important responsibilities.
Among many duties, the executor is called upon to make sure funeral arrangements are carried out per the deceased’s wishes as well as advise beneficiaries of their entitlements, apply to the Supreme Court for a Grant of Probate, have the deceased’s assets valued, finalise debts and liabilities owed by the estate, and defend the will against litigation by others.
These duties are fiduciary in nature, both to the estate and the beneficiaries, meaning the executor must act in the best interests of both. Sadly, there are occasions where an executor will not act in the best interests of either the estate or the beneficiary. Where the executor has a conflict of interest in administering the estate, or seeks to profit from his or her position, then the executor likely breaches their fiduciary duty.
Examples of an executor not acting in the best interests of the estate
An executor’s personal interests must not conflict with his or her duties to the estate, unless the beneficiaries provide express written consent stating otherwise. This includes situations where there is only the possibility or perception of a conflict of interest.
An executor must not make a profit from their position but in certain circumstances and under certain conditions, is authorised to claim a commission or some other renumeration for their services. An executor must not waste the property of the estate, or convert any part of the estate to their own use.
Time frames are a common cause of an executor breaching their fiduciary duty. Certain tasks of the executor, such as obtaining Grant of Probate and discharging the deceased’s debts, can be time-consuming. It’s generally understood that an executor has up to a year after the death of the will-maker to administer the estate and distribute the will’s bequests to beneficiaries.
After a year has passed, the onus is on the executor to provide a valid reason for the delay. In contrast, the executor can also become liable if they distribute the estate prematurely, such as before all taxation liabilities have been accounted for, or if notice of a potential claim against the estate has been made by a disaffected beneficiary. In this situation, if the executor is unable to recoup these funds they can be held personally liable to beneficiaries or other claimants.
What options are available to beneficiaries if an executor breaches their duty?
The duties of an executor are set out in the Succession Act 1981 (‘the Act’). If an executor neglects to perform or is in breach of those duties, there are courses of action available to beneficiaries.
Under section 52(2) of the Act, a person who claims to be aggrieved by the executor’s failure to perform their duties may make an application to the court for orders. The court is empowered to make any orders it thinks fit, including an order for damages. It could also order the executor to pay interest on any sums of money he or she has been in control of, as well as pay the costs of the aggrieved person’s court application.
It should be noted that an executor’s liability can last after their death, where it’s found they wasted the property, or converted any part of the estate they were empowered to administer, to their own use. In this situation under section 52A of the Act, the former executor’s own personal representatives will remain liable.
An interested party may also apply to the court for the removal of the executor and administration of the estate by an independent person such as the Public Trustee (known as an ‘administration order’), based on the executor taking too long to obtain a Grant of Probate or otherwise delaying the administration of the estate.
This order is generally considered a last resort, with the court first preferring to make orders such as requiring executors to furnish accounts of their administration of the estate.
Protections for executors
Those considering taking legal action against an executor for any of the reasons outlined above should be aware that executors have some statutory protections under section 44 of the Act.
Where an executor properly distributes part of the estate for the maintenance and support for the deceased’s dependant spouse or child, for example, no legal action can be brought against the executor.
An executor is also protected against claims regarding distribution of the estate if:
- The distribution was properly made (i.e. compliant with the terms of the will); and
- it was made no earlier than six months after the deceased’s death, and the executor did not receive notice of an application (or intended application) such as a family provision application, against the estate; or
- if notice of an application was received – no earlier than nine months after the deceased’s death (unless the executor received written notice that the application had commenced in court).
Consulting a wills and estates legal professional
If you believe the executor of a will of which you are a beneficiary or potential beneficiary is not acting in the best interests of the estate, contact Arbon Legal Group today. We’ll provide clear, comprehensive advice on what can be done to ensure the deceased’s will is properly administered, protecting your interests as well as those of other beneficiaries. Call us on (07) 5562 0444 for a free initial, no-obligation consultation.