Taking on the role of an Executor carries with it a great deal of responsibility. An Executor has the legal authority to administer an estate and is ultimately responsible for any mistakes made. They can be held personally financially liable for any breaches of duty.
As a result it is imperative that the Executor does everything in their power to ensure that they include all assets in the inventory of the estate and that they settle all liabilities of the Estate in full.
A recent case in point
In a recent case a Pursuer claimed that he was due payment of a share of the value of assets that the executor had allegedly failed to include in the inventory of the deceased’s estate. The Pursuer, who was under the age of 16 during the estate administration and raised the claim years later, claimed that there were various items not included in the inventory of the deceased’s estate and as a result the Executor was in breach of their duties to the estate.
There was little evidence that some of the items existed and some items were even of no value, however there was a joint bank account which the executor was unaware of at the time that he submitted the inventory to the court.
The Pursuer’s claim was dismissed on the basis of the lack of evidence and the fact that the Defender had acted honestly when signing the inventory of the estate. In respect of the joint bank account, the Sheriff held that it would be “absurd” to pursue the joint account holder 20 years following the death.
What can Executors do to reduce the chances of future claims?
It is not uncommon that a disgruntled beneficiary challenges an estate but it can be unsettling for an executor knowing that they may face personal liability years down the line. Although being an Executor does carry a great deal of responsibility and can be very time consuming there are ways of ensuring you carry out your duties diligently. A few brief pointers below may help you along the way.
Take professional advice
In this case, when the Sheriff referred to the Executor’s conduct, she noted that she could see that the Executor had acted and relied entirely upon the advice and guidance provided by the solicitors engaged to assist with the administration of the estate.
If you have taken professional advice and act according to that advice you will likely be in a much better position in respect of any claims that arise in the future.
Act honestly and reasonably
The Sheriff also referred to the fact that the Executor had signed the Inventory honestly, believing it contained what it ought to. When submitting an inventory of estate to the court in Scotland the Executor must sign a declaration confirming that they have provided the information on the estate to the best of their knowledge and belief. Provided you have included all information you are aware of and made reasonable enquiries as to the extent of the deceased’s estate you are acting responsibly which should help avoid any substantive claims.
Where there are tensions and disgruntled beneficiaries, it is important to act reasonably from the outset. Although you do not have a legal obligation to update beneficiaries throughout the process, its good practice for the executor to be open and keep beneficiaries informed where possible, particularly if they are anxious about the estate and request updates.
Keep good records
If you have been dealing with all or some of the estate administration without an agent it is important to keep a good record of any monies received into or paid out of the estate to ensure that everything has been accounted for. It is important that a detailed Executry account is circulated among the executors for approval and sometimes the beneficiaries (where appropriate) at the end of the process.
It is not always necessary to obtain professional valuations for all items of estate but it is advisable in some circumstances, particularly in estates which are likely to attract Inheritance Tax.
Avoid distributing an estate within six months
Creditors have a period of six months in which to lodge a claim on an estate so you may wish to avoid distributing the estate to beneficiaries before the expiry of six months. If the estate has been distributed within that time frame and a creditor submits a claim you could be personally liable to meet the claim.
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