Individuals are often appointed as an executor or trustee under a Will, without sufficient knowledge of the duties they must comply with both under statute and common law (case law). A recent Court of Appeal Judgement highlighted the importance of understanding and complying with those duties, and the consequences of failing to do so.
What are executor and trustee duties?
There are various duties executors and trustees must comply with in their appointed role, and failing to do so can result in significant and costly consequences.
Unfortunately for many individuals we advise, they are simply unaware of the responsibilities that accompany their position, and crucially in the civil court, not being aware of your duties is not a valid reason for non-compliance. This means that even if you were unaware you had to do something, you could face financial repercussions in the future for not doing it or doing it badly.
If you are appointed as an executor or a trustee under a Will (or otherwise), it is absolutely vital you seek specialist legal advice as soon as possible to ensure you are complying with your duties and are protected as a consequence going forwards.
What happens if I don’t comply with my duties?
The consequences of an executor failing to comply with their duties has been recently highlighted in a Judgment given by the High Court, and reinforced by the Court of Appeal, in which an executor was ordered to pay £1.7m back to an estate after it was found he had acted improperly in his duties.
In this case, The Estate of Veronica Cadogan, a brother and sister (Kevin and Kirsty) who were appointed as joint executors under their mother’s Will, became embroiled in a dispute over the use and management of their late mother’s estate.
Kirsty asserted that Kevin had used estate properties for his own benefit (by occupying them and failing to pay rent) and keeping rent received from other estate properties for his own benefit.
Even though Kevin was a beneficiary of the Estate, his appointment as executor compelled him to account to the estate for all rents received by estate properties, and to pay a market rent in respect of the properties he had occupied.
The Court agreed that Kevin’s behaviour had amounted to ‘wilful deceit’ and ordered him to pay to the estate the full amount it should have received had Kevin not acted inappropriately. This amounted to £1.7m (being the rental income Kevin kept, and the rental income the estate should have received).
Kirsty didn’t come out unscathed in this dispute either, however. She was also found to have been keeping rents, but was simply ordered to repay the sums she kept, less expenses she incurred.
Removing an executor or trustee
If an executor or trustee breaches their duties, it is possible for the court to order they are removed and replaced.
In Kirsty and Kevin’s case, they were both removed and a professional administrator (a solicitor) was appointed in their place. Whilst this incurs an additional expense for the estate or trust, where there are high value assets or complex aspects (such as overseas assets or beneficiaries under the age of 18), it is even more important to consider this option.
If an executor or trustee is removed, it is possible they will be personally liable for their own costs and a proportion of the other party’s.
When to seek advice
If you have been appointed as an executor or trustee, you should seek advice as soon as possible. As the case above highlights, the consequences of not complying with the raft of duties placed upon you can be severe.
If you have been asked to act as an executor or trustee and are unsure whether to accept the appointment, we would strongly suggest you seek specialist legal advice first to allow you to make an informed decision.