When administering an estate, the obligations of an administrator or executor (collectively referred to as the Personal Representatives or “PRs”) must administer the estate with reasonable care and skill, within a reasonable timeframe, and in accordance with the terms of the will or the intestacy rules. B P Collins’ contentious probate team explores what a PR should do if they become aware of a claim against the estate.
What is a Personal Representative?
In respect of most claims against an estate, the PRs’ role is to remain neutral and to protect the estate assets pending resolution of the claims. The substantive disputes tend to be between the beneficiaries of the estate rather than the PRs.
The PRs’ action may depend on the type of dispute and the steps taken by the parties. In relation to an Inheritance Act claim the PRs would usually continue to gather in the assets of the estate but would not normally make full distributions until the issues had been resolved. The PRs’ position of neutrality in the proceedings means they should agree to abide by an order of the court and to assist the court as required, for example, by providing information about the assets within the estate and circumstances surrounding the preparation of any will. This usually also involves sharing that information with the parties to help narrow issues in dispute and facilitate settlement discussions, before proceedings are issued.
In other cases, the PRs may be unable to administer the estate and would simply need to allow the dispute to be resolved. For example, if the allegation is that the will is invalid, the claimant would usually have lodged a caveat against the estate meaning that no grant of probate can be obtained, unless it is “warned off”. A PR who continued to ‘intermeddle’ with the estate despite these allegations would risk facing personal liability for any misappropriated assets.
When urgent steps need to be taken
In some cases, there may be a caveat against the estate but there are urgent issues which need to be dealt with which cannot wait the resolution of the dispute between the beneficiaries. A few examples include:
- The estate owns a property which has been flooded and requires urgent repair, and estate funds must be accessed in order to do this;
- The deceased died having exchanged contracts on a property but not having completed the purchase;
- The deceased’s child has urgent needs or costs (such as medical costs or school fees) and these can only be funded by estate funds; or
- The deceased was the sole director and shareholder of a company which risks becoming insolvent, facing claims, facing penalties for failure to file tax returns and pay tax, or faces being struck off the register for failure to file annual accounts.
In such cases, it may be possible to obtain a limited grant of probate, or limited grant of representation, specifically to deal with urgent matters but without giving full power to the PRs to gather in assets and make distributions. Examples of “limited” grants are:
- Grant ad colligenda bona – this allows the applicant to preserve the estate assets until a full grant can be obtained. It will always be a grant for a limited purpose and only for preservation of the estate. It does not generally allow the estate to be distributed;
- Grant pendente lite (pending suit) – this is a wider powered grant which can only be made during the course of probate proceedings. The PR appointed under a grant pendente lite has all of the powers of the administrator of an estate, except of the power to distribute;
- Grant limited to property – this grant gives power to deal with a specific property in an estate. This might be ‘real’ property or an asset such as shares or a particular bank account. It would often be used where the deceased had entered into a contract to sell their property but died before the sale could be completed.
What about allegations made where claims have not been issued?
On occasion, prospective parties to proceedings may make allegations, without taking any follow-up action. Beneficiaries may suggest that they should be entitled to a bigger share of the estate but not actually issue any proceedings. This can place the PRs in an uncertain and difficult situation. In such cases the PRs have several options, which largely depend on the nature of the claim and the steps taken by the parties to the dispute.
Example 1: the complainant has taken a caveat against the estate but not issued any claim against the validity of the will
Caveats prevent an estate being administered by preventing a grant of probate being issued. They last for six months (but may be renewed every six months) unless removed. Sometimes the PRs may simply await the expiry of the six-month period and lodge the application for the grant on the basis that the caveat has not been renewed. However, PRs should be cautious doing this because a failure to renew the caveat does not necessarily mean that the complainant will not later issue proceedings. A PR who has administered an estate in the knowledge that there was an outstanding claim against the estate may face personal liability.
The PRs might be advised to issue a warning against the caveat. A warning requires the caveator to respond within 14 days if they maintain a grant should not be issued. If the caveator does not respond, the caveat can be removed. If the caveator does respond (called ‘entering an appearance’) it is then open to either party to issue a probate claim.
Example 2: the complainant has alleged a 1975 Act claim but not issued proceedings
There is no reason why an allegation of a 1975 Act claim should prevent a grant being issued as it is not a concern about the testamentary documents (the will) or the PRs right to administer the estate. An alleged 1975 Act claim will relate to the reasonableness of the provision made (or not made) for the claimant and should not, therefore, prevent the PRs obtaining a grant and collecting the estate assets, filing tax returns etc. In such cases, the PR would then usually give an undertaking to the claimant, not to make any distributions until the claim is resolved or determined.
A claimant in a 1975 Act claim only has six months form the date the grant of probate has been obtained to issue proceedings. Therefore, an executor is usually safe to assume that no claim will follow after this date and will not usually be held personally liable for distributing an estate on the basis of the will or intestacy having not received any claim within the deadline.
However, there is a strong word of caution that every case and every estate is unique and PRs are strongly advised to seek advice on their position before relying on the passage of time as a reason to distribute an estate notwithstanding a known claim.
Example 3: the complainant has an alleged claim other than a 1975 Act claim but has not issued it
A common example of such a claim might be a proprietary estoppel or constructive trusts claim, where a person says that the deceased either had no right to give away property because it was promised to them (a proprietary estoppel claim) or because they already owned some or all of the beneficial interest in that property (a constructive trust claim).
A PR should be cautious in such cases. Each of these claims concern the beneficial interest in property and may affect what is and is not in the estate. For example, the complainant may claim that they owned a house because the deceased gifted it to them in their lifetime and simply failed to file the appropriate documents to reflect the gift with the Land Registry. If the complainant is correct, the property was given away before the deceased’s death. It would therefore not pass under their will or the intestacy rules and the PRs have no right to deal with it. If they sell it and distribute the money or give it away to someone else, knowing about the complainant’s claim, they may be personally liable to the complainant.
The PRs might therefore consider applying to the court for a so-called “put up or shut up” order. This order requires a complainant to issue their claim within a certain time period, after which the PRs may distribute the estate. The complainant is not necessarily debarred from issuing their claim after the period but the PR who administered the estate would likely be protected from personal liability.
Summary
The role of a PR is often a difficult one and is often complicated by complaints and claims against the estate. Where a PRs’ role is being frustrated by potential claims, it is usually advisable to seek specialist advice on the PRs’ responsibilities and potential liability. A specialist contentious probate solicitor can advise PRs on their options including whether and when to apply to the court in the face of a complaint which has not materialised into a claim.
If you are an executor or personal representative who is unsure how to respond to complaints against an estate or you require any advice regarding claims against an estate, please contact the contentious probate team at B P Collins by emailing enquiries@bpcollins.co.uk or calling 01753 889995.
