Opinion

Legacy loop: autumn edition 2020

Published: 12th November 2020
Area: For the individual
Recent case updates
Removal of executors - Liu v Matyas (2020) EWHC 2807 (Ch)

When disputes arise between trustees or executors and beneficiaries, any agreement between the parties can be difficult. Where matters have become contentious and allegations have been made, even where agreement to appoint someone new to step in and administer the estate, agreeing the replacement executor can be tricky. This was the case in the recently heard case of Liu v Matyas (2020) EWHC 2807 (Ch).

In this case, Mr Matyas and Mr Liu, as the deceased’s partner and brother, were named executors in the deceased’s will. The parties eventually agreed to stand down after a dispute had arisen and it was agreed that an independent professional executor should be appointed to administer the estate. Unfortunately, the parties had different opinions as to which independent professional executor was to be appointed. The parties simply could not reach an agreement on who should be appointed and the matter came before the Court.

Both parties submitted their reasons together with supporting evidence for their respective choice of professional executor to be appointed. There was little distinction between the proposed professional executors. Both proposed executors had a similar experience of acting as professional executors and knowledge of contentious matters (which was relevant given the history in the matter). The court also considered factors such as their availability to act, the continuing relationships between the parties and the wishes of the beneficiaries and found little to distinguish between the proposed executors.

However, due to a difference of £240 plus VAT between their hourly rates, and considering the value of the estate to be administered, it was considered that the solicitor based at a city firm with an hourly rate of £490 plus VAT was unjustified. The Court therefore considered that the alternatively proposed solicitor with an hourly rate of £250 plus VAT should be appointed.

This case reminds us that it is important to try to agree on matters out of court where possible, as this saves time and significant costs for all parties. In a situation where the identity of the replacement executor cannot be agreed, our tips for breaking a deadlock and avoiding further costs are as follows:

  1. Avoid proposing that a solicitor you are instructing is appointed as executor. Where tensions have arisen between parties, it is unlikely that the parties will agree to appoint someone who has acted for you previously. It is important that to avoid the dispute continuing, suggestions that are made give all parties the comfort of that person acting in a neutral and independent way going forward.
  2. Consider the size of the estate. Analysis of the value and complexity of the estate is key to establishing whether an independent professional executor should be appointed or whether a lay executor may be more suitable. It may be difficult to find a suitable lay person who is entirely independent and willing to be appointed, but if possible, this can save the estate a further layer of costs in respect of the administration itself. Equally, if a professional executor is to be appointed, do consider the costs they will charge for administering the estate in comparison to the size of the estate.

Seek legal advice early. If disputes have been ongoing between parties for some time, a solicitor can assist in negotiations between the parties and bring an end to the dispute sooner, avoiding proceedings going to court.

Delays in probate applications

There is currently a considerable backlog of probate grant applications that have been submitted but not yet issued.

In an open letter dated 11 November 2020 to charity organisations, HM Courts & Tribunals Service (HMCTS) sought to provide clarity to the charity sector on the issue. Currently, the number of applications awaiting issue stands at around 29,000, an increase of 5,000 than at the beginning of April 2020. Many of these applications have already been considered but have been stopped due to errors on the applications and/or missing documentation. According to HMCTS, completion of digital probate applications is currently taking anywhere from two to five weeks. HMCTS claim they have responded to the backlog by insisting that all probate applications made by solicitors are now made online and training additional staff to increase its capacity to process applications from December 2020 to March 2021. The position will be reviewed again by HMCTS at that stage and a further statement will be made before the end of the financial year.

Whilst the move to making online applications mandatory may speed up the process going forward, the current backlog in applications to be processed will inevitably have a knock on effect on the timeframe in which estates will be administered. However as reported by Legacy Foresight, whilst charities should be mindful of the current delays in grants being issued, the general outlook for charities to receive significant income from legacies this year remains positive.

What do you do when the named executor in a will cannot be located?

Sometimes locating the executor of a will can be difficult, particularly if the will was prepared many years before the person passes away.

When applying for a grant, you must be able to show that a reasonable search for the named executor has been carried out, this includes a thorough search of:

  • Companies House
  • Land Registry
  • Social media
  • word of mouth such as friends and family of the deceased
  • In online listings such as 192.com
  • Instructing a tracing agent

If the executor of the will cannot be found, and there is no replacement executor named in the Will, then the next step is to consult the Non-Contentious Probate Rules 1987 (NCPR) as to the available options.

In most cases, one or more of the residuary beneficiaries will be entitled to obtain a ‘Grant of Letters of Administration with Will Annexed’. This will provide the legal entitlement for the persons seeking to take over the role and actions of the previous executor.

If a residuary beneficiary is not prepared to take over the role of executing the will, Rule 20 of the NCPR provides a hierarchal list of people who are authorised to apply for such a grant.  Charities are able to apply if they are a residuary legatee named in the will.

Once it is decided who will apply for the grant, an application to the Probate Registry (or Court if contested) is required under section 116 Senior Court Act 1981. The Probate Registry and Court have wide discretion to ‘pass over’ an executor’s entitlement to take a grant and, in considering such applications, the focus will be on what is required for the proper and efficient administration of the estate. Both the wishes and best interests of the beneficiaries and the relationship between the parties will be taken into account. If it is considered that there are ‘special circumstances’ or it is ‘expedient or necessary’ to do so, the named executor’s entitlement will be passed over.

If perhaps, a grant was taken out some time ago and new estate assets have come to light but the executor cannot now be located, an application to the court to remove the executor can be made under section 50 of the Administration of Justice Act 1985 and replace them with one of the beneficiaries or someone independent. The application will need to be served on the executor if they can be located and this can be done by serving them at their last known address or by email (if permitted by the court). Evidence in support of the application will need to be filed with the application. The court may be prepared to deal with it on paper.

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