Administration: Rights of Beneficiaries and Liabilities of PRs Flashcards
(15 cards)
How can a beneficiary prevent the issue of a grant of representation and in what circumstances?
A person can enter a caveat at HMCTS, which, once entered, means a grant cannot be issued until it is removed or ceases to be effective
Can enter one if the mental capacity of executor or validity of will is questioned
Caveats list for six months unless extended
A citation is a way to compel the PRs to take the grant of representation. What different types of citation are there?
1) Citation to take probate
- Used where executor has intermeddled, but hasn’t applied for a grant of probate
2) Citation to propound will – authenticate the will by obtaining a grant of probate
- Used where there may be a will that would diminish their entitlement under an earlier will or under an intestacy
3) Citation to accept or refuse a grant
- Used where someone with a grant doesn’t apply or seems to have no intention of doing so
- If they are cited to act and don’t, the citor may be issued the grant
Can PR renounce?
Yes, with deed of renunication, but only if they have not intermeddled (executor only) and only before they obtain the grant (all grants)
Can a PR retire once they have accepted office?
Once a PR has accepted office, the appointment is for life unless the PR is removed by the court under the Administration of Justice Act 1985 s50
Application can be made by the beneficiaries or the PR themselves
What is ‘passing over?’
HMCTS can order that an executor is passed over in favour of someone else, where the executor seems unwilling to take the grant
Can be used after they have intermeddled, then nothing else for instance
What duty do PRs have in terms of maintaining accounts and information?
- PRs must keep accurate records of receipts and payments and beneficiaries can ask to inspect accounts; they can get an order to compel the PRs to provide this if they refuse
- Prior to final distribution of the estate, PRs will prepare estate accounts, showing all assets, income and payments made, and show this to residuary beneficiaries, who will sign a receipt to approve the accounts and discharge the PRs from further liability
- Beneficiaries have no automatic entitlement to disclosure of the reasons for the PR’s decisions on a discretionary matter
What are administration proceedings and who can bring them?
1) These can be brought by anyone interested in the estate (beneficiaries, creditors, PRs)
2) Can be an application limited to a particular issue
- PRs may seek guidance from the court on the performance of a duty
3) Can be an application for a general administration order (less common)
- Court supervises PRs and they cannot exercise powers without court’s permission - Last resort order
What does the concept of ‘executor’s year’ mean?
PR is not bound to distribute the estate of D before the expiration of one year from the death - applies to administrators too
PRs have this ‘executor’s year’ from the date of D’s death before they can be called on to distribute the estate
Beneficiaries can sue PRs directly if they breach their fiduciary duty. What does this mean?
PRs are fiduciaries and are obliged to avoid placing themselves in conflict between their duties and personal interests
They must account to estate for any unauthorised profit
Beneficiaries can also sue PRs directly for devastavit. What does this mean and how can a claim arise?
1) Refers to wasting of assets
2) Where a PR has caused loss to the estate by a breach of duty, a devastavit claim can be brought and, if PRs are liable, they must pay Bs out of own resources
3) Claim could arise from:
- Misuse of assets
- Maladministration (distribution not following will or intestacy rules; breach of duty to not pay of all debts)
- Negligence - failing to lock a property
4) If they cannot recover the full amount from the PRs, the correct beneficiary can recover compensation from the recipient who was wrongly paid
- Compensation will be equal to the amount which the beneficiary cannot recover from the PRs
What defences can PRs raise to a devastavit claim?
1) S61 Trustee Act 1925
- Court can totally or partially relieve a PR of personal liability if they acted honestly and reasonably and ought fairly to be excused
2) Exclusion clause in the will
3) Adult beneficiary, with full knowledge of the facts, consented to a PR’s breach of duty
4) Protection against unknown or missing claimants
- Unknown claimants - PR protected from liability if they placed advertisements and followed procedures in s27 Trustee Act 1925
- This doesn’t protect against beneficiaries who are known to have existed but cannot be found (includes people they knew but forgot about) – PRs should have obtained Benjamin order or insurance
5) Limitation
- Unpaid or underpaid beneficiary has 12 years to bring a claim to recover their share from the date on which the right to receive the estate accrued
- No time limit to bring actions for fraudulent breaches of duty or where PR has taken property from the estate for their own use
Where a PR distributes assets to someone who is not entitled, what options does a beneficiary or creditor have?
B may bring a proprietary claim to the assets (or their traceable
proceeds) from the recipient unless they are a bona fide purchaser of the assets for value without notice
B can bring a personal claim for compensation against the recipient of assets wrongly paid by PRs, provided that all remedies against the PRs have been exhausted
Time limit is 12 years for both claims
How can be a PR be removed?
Court has discretion to remove PRs - they cannot retire once they have taken the grant
They can replace or remove without replacement, but there must be one PR remaining
PR or B can apply
What rights can creditors exercise against PRs?
1) PRs take on D’s debts and liabilities, so causes of action against D pass to PRs
2) PRs must perform D’s contracts
- Only liable to extent of D’s assets
- 6-year limitation period
3) PRs can be personally liable to creditors under a devastavit claim though
What is an important point to remember about beneficiaries of an unadministered estate?
They do not have equitable interests in the assets but they do have a right to compel due administration.
