An executor has a duty to carry out the provisions of the will.
What should an executor do when beneficiaries or family members are not provided for under the will or have issues with the will?
An executor’s primary duty is to carry out the directions of the will (see this article for details about that duty). Therefore, it is not usually appropriate for you as an executor to agree to a compromise with a complainant without the approval of all the beneficiaries.
Once a claim has been made, the Estate cannot be distributed to the beneficiaries until the matter is resolved. It is in everyone’s interests to obtain a speedy resolution.
Thankfully, disputes can often be resolved (with or without the need for proceedings). As an executor, you should help provide a space for settlement discussions to take place.
If all the beneficiaries of the will agree to a resolution, they can sign what is referred to as a Deed of Family Arrangement, which sets out the basis on which they want the Estate to be distributed.
As an executor, you will want the terms of the Deed of Family Arrangement to protect from any potential claim that you breached your duty as an Executor. We have experience drafting these documents so please contact us for assistance.
What happens if matters go to Court?
When a claim is made against an Estate, it is made against the Executor as the named party. Usually the Estate is liable for the associated legal costs, not the Executor personally. (There are exceptions if the Court finds that the Executor took inappropriate actions which increased the costs of the proceedings).
The appropriate response for an executor to court proceedings depends on the type of claim being made.
If the claim is under the Family Protection Act 1955, the Executor’s duty is to accurately inform the Court of the Estate’s assets and liabilities and any other relevant information about the Estate. The Courts have held that the Executor should not actively defend the proceedings (i.e. they should not try and prove that the provisions of the will should be followed). It is only other beneficiaries of the will that are able to take that active defence.
For claims made under the Law Reform (Testamentary Promises) Act 1949, the Executor is entitled to defend the proceedings. However, if the beneficiaries of the Estate are opposing the claim, the executor can take a neutral stance.
If the claim is being made by an alleged creditor of the Estate, the Executor should actively defend the proceedings if it considers that the creditor’s claim is not legitimate.
Please see these articles for more information about Family Protection Act and Testamentary Promise claims.
We have experience assisting Executors to manage claims against an Estate, and to assist beneficiaries in negotiating a resolution. Please contact us to see how we can help you.
This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.
