Liabilities of personal representatives and their protection (Known beneficiaries) (Administration of estates)- FS

Question 1

What are the four options available to personal representatives for dealing with known but missing beneficiaries?

Answer 1

1. Keep back the missing beneficiary’s share
2. Obtain an indemnity from the other beneficiaries
3. Take out insurance against claims by the missing beneficiary
4. Apply for a Benjamin Order (declaring the person presumed dead)

Question 2

Definition OF Benjamin Order

Answer 2

A court order authorising the personal representative to distribute the estate on the assumption that a missing beneficiary is dead. This offers full legal protection but is costly and requires thorough attempts to locate the beneficiary.

Question 3

What are the risks of relying on an indemnity from other beneficiaries?

Answer 3

If the missing beneficiary reappears and the indemnifying beneficiaries lack funds, the personal representative becomes personally liable for the shortfall.

Question 4

Why is insurance against missing beneficiaries a limited option?

Answer 4

Because it is expensive, complex to calculate, and must often cover interest that may accrue on a missing beneficiary’s entitlement.

Question 5

How can personal representatives protect themselves against unknown beneficiaries or creditors?

Answer 5

By publishing a notice under section 27 of the Trustee Act 1925 in the London Gazette and a local newspaper, requiring claimants to come forward within 2 months.

Question 6

List: Protective Steps Personal Representatives Should Take Regarding Missing Beneficiaries

Answer 6

1. Publish a statutory notice for unknown beneficiaries
2. For known missing beneficiaries, choose one of:
   • Hold back assets
   • Indemnity from other beneficiaries
   • Insurance
   • Benjamin Order

Question 7

When should a personal representative generally avoid distributing the estate?

Answer 7

Until 6 months have passed from the date of the grant of representation, to allow for claims under the Inheritance (Provision for Family and Dependants) Act 1975.

Question 8

Why might holding back a missing beneficiary’s share be the safest option despite being unpopular?

Answer 8

It ensures that the funds are available should the missing beneficiary later appear, avoiding any personal liability for the personal representative.