Taking on the role of a personal representative to administer a deceased person's estate is often carried out by a family member or by a solicitor instructed by that family member. A recent case in the High Court demonstrated a catalogue of undesirable situations in which Executors (one type of Personal Representative) found themselves.
At the first hearing, the Executors were ordered to pay compensation to some of the beneficiaries under a deceased's Will, as a result of selling a valuable painting at an undervalue, paying excessive amounts of money out of the estate to contractors, and incorrectly paying the whole of the estate to other beneficiaries and not to those who should have benefited.
The Judge at the first hearing made an Order that the Executors had to pay £275,000 on an interim basis whilst an enquiry took place as to the value of the sale of the painting.
The Executors said that the Judge had been wrong to find that there was an undervalue sale, that the Judge should not have ordered the interim payment, the figure the beneficiaries suggested for what was reasonable to pay to contractors (£100,000 instead of £600,000) had no evidence behind it and that payment to the wrong beneficiaries had been a mistake based on incorrect advice received by the Executors.
The Judge dismissed all of the points of appeal and said that the painting had been sold at a substantial undervalue in a case where there was no need for urgent cash in the estate. The order for the interim payment was correct and if the amount that the Judge had ordered proved to be too high, the beneficiaries would need to refund some of it.
The Executors in this matter needed to show that the money they had spent out of the estate had been properly spent. They did not do so, and so, the Order that the Judge made was correct.
Finally, and one of the most important duties of an Executor is to make sure that they pay the sums out of the estate to the correct people. A genuine mistake might be grounds for an Executor to escape some liability, here the Judge found that the Executors had been advised correctly as to who should be paid what and it was the Executors who had made the error after having received the correct advice.
Lessons to be learned
Whilst this case appears to be relatively extreme, it shows that the duties of an Executor are to make sure that the estate achieves the maximum possible benefit for the eventual beneficiaries. It also proves that the role is not to be taken lightly and the consequences if the wrong decisions are made.
If you are faced with the prospect of being a personal representative in a deceased's estate, you should seek legal advice at the earliest opportunity to fully assess your options.
Case Name: Kibby v Skillings (Chancery Division) (25 October 2016), unreported.