Administration - PR Liability and Protection Flashcards
What is a PR’s general legal exposure during estate administration?
PRs are personally liable for any loss resulting from breach of duty and may also be liable for co-PRs’ breaches if they fail to monitor their conduct.
What kind of claim can be brought against a PR for breach of duty?
A devastavit claim (wasting of estate assets), which may result in the PR being ordered to make good the loss personally.
What are examples of maladministration?
- Paying the wrong beneficiaries
- Misallocating estate funds
- Paying legacies before debts without reserving funds
What is an example of negligence?
- Unreasonable delay
- Poor investment decisions
What is a breach of fiduciary duty?
- Self-dealing or acting in conflict
- Taking unauthorised profit
- Buying estate assets without permission
How can a PR be removed?
- By court order
- By administration proceedings, where the court administers the estate
What are the main methods of protecting PRs?
- Court guidance
- s.48 AJA 1985 application
- s.27 TA 1925 notice
- Benjamin Order
- Presumption of Death Act
- Insurance
- Indemnity
- Payment into court
- s.61 TA 1925 exoneration
- Exemption clauses in the will
When might PRs seek court directions?
If they foresee legal uncertainty or risk in estate administration.
What is a s.48 AJA 1985 application?
An application to rely on a written legal opinion where the will is unclear and no dispute exists.
What is the purpose of a s.27 TA 1925 notice?
To protect PRs from claims by unknown beneficiaries or creditors if they distribute two months after notice.
What are the limitations of s.27 protection?
- Does not protect against known but missing beneficiaries
- Does not protect other beneficiaries who received too much
- PRs who are also beneficiaries remain liable in that capacity
What is a Benjamin Order?
A court order allowing PRs to distribute on the assumption that a missing person is deceased or had no issue.
What must PRs show to obtain a Benjamin Order?
That they have made full enquiries and there is no reasonable way to know the truth without disproportionate expense
What does a Presumption of Death order do?
Declares that a person is presumed dead, confirming a date of death for the purpose of estate administration.
What is a beneficiary indemnity?
A promise from a known beneficiary to reimburse the PR if someone later claims against the estate.
When might PRs make a payment into court?
When a beneficiary refuses to accept an inheritance or to manage uncertainty about distribution.
How can PRs seek exoneration from liability?
By applying under s.61 TA 1925, if they acted honestly and reasonably, and omitted to seek court direction.
Can a will contain PR exemption clauses?
Yes. Clauses may limit liability for lay executors and disapply the statutory duty of care.
