Taking on the role of an estate executor can present challenges and sometimes the stance taken by beneficiaries can exacerbate this. This can happen in a number of ways. The Will may be challenged, the beneficiaries may fall out with one another or they might demand that they are consulted every step of the way.
Executors must act in the beneficiaries’ best interests, but this does not necessarily mean they must comply with their every demand. Below are some examples of difficulties executors can experience, and the ways in which you can handle those tricky situations:
Challenges from beneficiaries and conflicts – the risks for executors
Challenge to the Will
A disappointed beneficiary may challenge the validity of the Will, or bring an Inheritance Act claim for greater provision. In such circumstances the estate should not be distributed, except for exceptional circumstances, to minimise the risk of personal liability.
As executor, you should usually adopt a neutral stance in such situations, unless you are also a beneficiary, in which case you can defend your entitlement. If you are one of several executors, not all of whom are beneficiaries, it is sometimes better for you to be separately represented. Solicitors cannot act for you all if there is a conflict of interests.
Occasionally, if all parties are at loggerheads, it can become inappropriate or too risky to continue as an executor. In such circumstances, a neutral candidate can be appointed in your place and as family members are not always ideally suited, this will often be a professional executor or solicitor. This has its advantages but it will be costly, and whether this is the best solution depends very much on the value of the estate.
Decisions being scrutinised
Executors sometimes need to make big decisions. There are many complicated estates, involving foreign assets or Trusts, and when there are beneficiaries with competing interests, you can be lumbered with a difficult decision to make. Selling an estate asset can sometimes be unpopular, valuations can be disputed and occasionally you get beneficiaries wanting to see an occupied estate property being rented out, meaning someone may have to leave.
The beneficiaries’ sign off is not always needed when making tough decisions but you should take their wishes into account. If unsure, consider seeking legal advice and if needs be, you can apply to Court for a Judge to approve your decision, or make directions. Getting Court approval is sometimes necessary when you have competing interests and the Will does not give clear instructions, but you can do this as a bit of a back-covering exercise, if you feel under pressure to validate your actions.
You do however need the Court’s permission (by way of a Beddoe order) before litigating, or defending a claim. If you get involved in Court proceedings without this, you do so at your own risk and will not have automatic costs protection. In urgent situations, you can sometimes apply for permission retrospectively, although this should be avoided if possible.
Accounts and enquiries
Some estate beneficiaries mistrust executors – either because they do not approve of them or because they themselves are very meticulous. Obviously, executors should keep accounts as they are going along and these can be disclosed if appropriate to do so. However, there are sometimes scenarios in which an executor should provide additional information to a curious beneficiary.
Beneficiaries are not entitled to ask for everything, but if information is withheld, they can take executors to Court for “account and inquiry” orders. Whether they will succeed depends on the circumstances and the reason for applying – beneficiaries cannot just demand information for the sake of being difficult. The nature of the information can extend beyond accounts and any documents an executor has can be disclosable, even where there is no immediate suggestion of wrongdoing.
Sometimes legal professional privilege means that documents relating to professional advice can remain secret, but in Lewis v Tamplin  EWHC 777 (Ch) the Court found that this information can be disclosed if it is highly relevant to a key issue in the dispute.
Executors’ legal costs are often challenged by beneficiaries, as these can usually be recovered from the estate. Whilst executors are not expected to incur any personal expense, one point to bear in mind is that all costs should relate to “proper estate business”.
Acting as a Trustee
Similar duties apply to you as a trustee. You must act in the best interest of the beneficiaries of the Trust and adhere to the Trust’s objects, as far as these are set out in the Will or any document annexed to the Will (e.g. a letter of wishes).
Acting as a trustee is usually more of a long-term appointment, often relating to legacies for child beneficiaries and they may demand information from you. In such cases, the position in English law has traditionally been that trustees should give reasonable information but are not necessarily obliged to disclose the reasons behind their decisions (the Londonderry principle).
In Lewis v Tamplin, the Londonderry principle was found to apply only to the way in which trustees divide the Trust fund amongst beneficiaries, meaning that where general management decisions are concerned, trustees must be more forthcoming with information. As this decision potentially opens the door for more information requests, documenting your activities is very important, in case you are challenged.