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Once a contentious situation has arisen after the death of a loved one, the common reaction is that all parties become entrenched in their individual stances and a bitter long drawn out dispute arises, largely driven by principles and the history between the relatives. This becomes difficult where the dispute is between beneficiaries and one of those beneficiaries is also an executor to the estate.
Occasionally, in such circumstances, the executor will choose to step down as an executor with a view to aiding in placating the dispute. It is, however, only possible for an executor to do so if they have not ‘intermeddled’ in the estate.
What is intermeddling with an estate?
The word intermeddled is used commonly by contentious Wills and Probate practitioners but it is not a word that will be familiar to most people and is certainly not a word used in every day conversation. This blog explores what acts of an executor amount to intermeddling.
Section 28 of the Administration of Estates Act 1925 (AEA) confirms:
“If any person, to the defrauding of creditors or without full valuable consideration, obtains, receives or holds any real or personal estate of a deceased person or effects the release of any debt or liability due to the estate of the deceased, he shall be charged as executor in his own wrong to the extent of the real and personal estate received or coming to his hands, or the debt or liability released, after deducting—
(a)any debt for valuable consideration and without fraud due to him from the deceased person at the time of his death; and
(b)any payment made by him which might properly be made by a personal representative.”
Intermeddling is therefore set out in this section as an individual:
- Taking steps either fraudulently or without full valuable consideration; and
- Obtaining, receiving or holding property of the deceased or settling any of the deceased’s debts.
In respect of paragraph one above, most situations will not actually involve fraud but rather, the position of executor held by an individual will usually be a role in which the individual receives the assets of the deceased and will not have made any payment for them. In such circumstances, the individual will have paid no consideration for the transfer of the asset to him/her.
Case law has indicated that even minor acts may be intermeddling but mainly where there is an assumption of intention to perform the duties of an executor.
The main steps that will inescapably be classed as intermeddling include:
- Disposing of any of the deceased assets, no matter the value of the items disposed of;
- Continuing the trade or business of the deceased;
- Paying the deceased’s debts;
- Making demands for payment of sums due to the deceased; and
- Transferring property of the deceased to third parties.
If, however, the steps taken were out of necessity or on a charitable basis the Courts will often accept that the individual has not intermeddled.
By way of example, the following circumstances have been accepted by the Court as not intermeddling:
- Opening and executor’s bank account (but not having deposited anything in it);
- Determining what assets the deceased had;
- Paying medical fees outstanding in respect of the deceased;
- Insuring the deceased’s assets;
- Organising the funeral and making payment from the deceased’s estate;
- Providing food for the deceased’s children or animals; and
- Undertaking urgent repairs to the deceased’s assets.
If an individual is found to have intermeddled:
- He/she will be unable to step down as executor without an order of the Court;
- He/she will be liable to creditors and beneficiaries for the acts taken by the individual during his/her period of intermeddling (which clearly will not be an issue, if no loss has arisen);
- He/she will continue to be an executor, unless and until there is a Court order removing him/her, meaning that he/she would be liable for inheritance tax on the same basis that the executor would; and
- Where he/she has acted dishonestly and may be subject to criminal investigation/prosecution.
How Nelsons can help
Kevin Modiri is a Partner in our Dispute Resolution team.
If you are unsure as to whether you have intermeddled in any estate and wish to discuss the same, please contact Kevin or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.