Solicitors Disciplinary Tribunal Found That A Partner Of A Law Firm Acted Dishonestly

A partner of a law firm who transferred his late client’s £1 million home into his personal bank account was struck off the roll of solicitors after the Solicitors Disciplinary Tribunal found that he had acted dishonestly.

Case background

James Allie, the law firm partner, was the sole executor of the client’s Will. Within five months of his client’s death and prior to the grant of probate, Allie transferred ownership of the client’s home and over £825,000 from the estate into his personal bank account, without the knowledge of any beneficiaries of the estate. He then used the cash to buy a flat for himself to live in rent-free. Allie claimed that what he did was for the purpose of increasing the value of the client’s estate by converting her home into flats and by using her money to invest in more property.

The Tribunal found Allie to be in breach of his professional code of conduct and his duties as an executor of his client’s estate. The Tribunal condemned Allie’s conduct in very strong and clear terms:

There were numerous problematic actions taken by Allie in this case. Apart from the misappropriation of the client’s estate, the preparation of the Will was also called into question by the Tribunal. The Will was prepared by Allie and witnessed by Allie together with another person. This person, who was not a client of the firm, later received sums totalling £33,000 from Allie’s law firm. Moreover, Allie was appointed as the sole executor, curiously, in his personal capacity, rather than in the capacity of a partner in the law firm.

As a result of his conduct, Allie was struck off the roll and was ordered to pay costs of £25,000.

How do solicitors hold estate property when acting as executors of a client’s estate?

This case illustrates the importance of solicitors handling estate assets properly when acting as executors of an estate.

Executors, solicitors, or otherwise, would normally be transferred title to the deceased’s properties for the purpose of administration of the estate. Although executors become the legal owners of the properties, they do not actually “own” the property in the real sense. They hold the property on trust for the beneficiaries in accordance with the terms of the Will as trustees and thus have various duties (imposed by either the Will, a separate trust deed, or the law) to ensure that they are handling the properties in a way that is in the best interest of the estate and the beneficiaries entitled to them.

Solicitors are often instructed by clients to act as executors by appointing partner(s) of the law firm in the Will. It is technically permissible for the named partners to hold the properties of the estate in their name as trustees but it is a professional conduct requirement that client properties must be separated from the partners’ personal property, i.e. be held in separate client accounts. However, it is a more common and prudent practice for a law firm to set up and use a trust corporation for this purpose. This can ensure complete separation of client estates’ and partners’ personal property and avoid suspicion of misappropriation. Another practical benefit is to ensure that departure, retirement, or death of law firm partners would not affect the administration of clients’ estate.

What options do the beneficiaries have to recover the property?

Solicitors acting as executors, if they have misappropriated clients’ estate assets, will face disciplinary sanctions but this does not answer the aggrieved beneficiaries’ claim to have their loved ones’ assets returned or their loss compensated. Fortunately, there are various legal remedies available to beneficiaries.

Executors who have misappropriated estate assets are personally liable to pay them or their equivalent value back to the estate. Beneficiaries have the power to demand that the executor account for estate property. If a property has been transferred to a third party, it may have to be traced and claimed from the third party.

Misappropriation of estate property by an executor is a breach of trust. Beneficiaries are also entitled to claim compensation against the executor and the executor will be ordered to pay such compensation out of his personal assets.

Beneficiaries can also agree to or apply to the Court to remove the executor and appoint replacement executor(s).

If you have enquiries about instructing a solicitor to be your executor, or about potential issues of misappropriation, it is important that you seek independent legal advice to best safeguard your interest.