Getting away with it: rogue executors

“Let’s choose executors... and talk of wills.” Fans of the Bard will recognise this line from Richard II, a line that is frequently reproduced on the flyleaf books on will precedents.

One of the strongest selling points for writing wills is that the testator has and is exercising their choice. They choose executors, they choose guardians if there are minors, beneficiaries and ?so on.

The alternative is to let the state choose for them; rather like asking the government to organise a holiday.

Horribly wrong

The choice of executor is critical, and it can go horribly wrong. Take the case of the late John White who died in March 2007 leaving an estate of some £225,000. He appointed his son, Andrew, as the executor.

Some £75,000 disappeared through ‘administrative costs’. The executor spent around £3,000 on holidays, £35,000 to purchase a property and then moved to Tenerife. Within a year he was in debt. He had paid himself some £35,000. So far so good.

However, the will provided that his niece should receive about £90,000. Inevitably Andrew was convicted of fraud, to which he pleaded guilty, and he was sentenced to two years imprisonment.

Fortunately for the beneficiaries, unfortunately for the purposes of this article, such behaviour is very rare indeed, but it does highlight the potential of getting a rogue executor and it begs a number of questions.

The role of the executor is defined quite simply in the Administration of Estate Act section 25, and indeed is reproduced in the executor’s oath:

1. to collect and get in the real and personal estate of the said deceased and to administer according to law;

2. when required to do so by the court, exhibit on oath in the court, a full inventory of the estate and, when so required, render an account of the administration of the estate to the court; and

3. when required to do so by the High Court, deliver up the grant of probate or administration to that court.

An executor takes his or her power from the will, not from the grant of probate, and on death all property vests in the executor. It is therefore a position of responsibility and trust. It is often the executor who arranges the funeral, who obtains details of the estate, gets the grant of probate and administers the estate, ultimately passing assets to beneficiaries in accordance with the will.

If an executor does not want to apply for probate and get involved then, of course, they can either renounce, provided that they have not intermeddled, or power can be reserved to them. Once probate is granted then they cannot retire as an executor.

Serious misbehaviour

What to do if it goes wrong? The first and obvious step is to take it up with the executor. If that does not work then an application to court to remove the executor might be necessary.

The beneficiaries will need to prove serious misbehaviour before the court. Clearly, if the executor has been stealing from the estate, as with Mr White, then that is likely to be conduct sufficient to persuade the court that the executor should be removed. If the chosen executor has physical or mental disabilities that prevent him from performing his function properly, then again the court is likely to remove that executor and appoint a substitute.

Occasionally an executor, for whatever reason, refuses to make an application for probate until the grant is issued, the estate is frozen and is not available to the beneficiaries. Again, the first port of call is with the executor, giving notice that if an application is not made then the court will become involved, and the injured party will seek the appointment of somebody else to administer the estate, which is an application that is done by citation.

The difficulty is that there are no checks in place when it comes to the appointment of executors. Testators tend to want members of the family, whether or not they are qualified, usually on the basis that they would be offended if ?they are not appointed. Frequently, banks are appointed, but my own experience born of a number of years is that they are extremely expensive and, of course, there is a new breed of will writer which tends to be in bed with probate companies who offer ‘good value’ fixed-fees for probate.

My firm recently had a widow who, following the death of her husband, was visited by the will writer who explained to her that she would be better off appointing their firm to deal with the administration for a fixed fee of £8,000. Going to a solicitor would cost a lot of money, the will writer said.

My colleague, blissfully ignorant of the quote that the widow had received, indicated that it would probably cost about £800 to deal with the matter ?from start to finish if we were instructed. ?We were.

I well remember a 1974/75 seminar in London. This was a post-Budget seminar, back in the days when Budgets were exciting and a worthwhile seminar could be built around them. I clearly remember one speaker suggesting that the only sort of will that any lawyer should ever contemplate making for a client is one where the lawyer or his firm are appointed executors and the estate is left in discretionary trust. He suggested that it was the perfect will, it would never have to be changed and, I guess to a larger extent, that is right.

One of the unfortunate legacies of recent and no-so-recent government action opening up legal services is that these organisations are free to charge more or less what they wish. I recently had a client who produced two wills, both incomprehensible, for which she and her husband had paid £4,000.

The need therefore is to capture clients at the point of making a will. It is sad but true that it is still only about a third of the population that bothers to make a will, and this is something that the profession needs to address.

Red tape

All of this begs the question as to whether executors, given the fiduciary nature of their office and often the amateur status of the holder of the office, should in any way be either regulated or perhaps the subject of some other form of protection for the beneficiaries, including some sort of bond.

It is extremely difficult to see how either of these would work. There is, it would appear, more than enough regulation affecting all our lives at the moment and none of us would welcome any more. Where professional executors are appointed, be they solicitors or banks, then there are regulations in place; if the worse happens there is a compensation fund in place and sanctions and penalties for wrongdoers.

Part of the problem is the new breed of unregulated will writer and their company and I have no idea what, if any, safeguards are in place. The real issue is the amateur executor as in the White case, who is suddenly confronted perhaps with responsibility that they are not used to and temptation which they find difficult to resist.

It would be unfortunate to create another layer of bureaucracy and expense to cover what, I suspect, are infrequent instances of either dishonest or negligent behaviour on the part of the lay executor which results in a loss to the estate and thus to the beneficiaries.

Beneficiaries who do find themselves the victim of either dishonest behaviour or negligence have a difficult choice to make. Dishonest behaviour is criminal and, if caught, the perpetrator will face justice, but that does not necessarily satisfy the beneficiary. Their only recourse, other than the executor, might be the professional adviser. Similarly, with a negligent executor, the end result from the beneficiaries’ perspective is likely to be the same, but unless the executor has assets which can be attacked then it is difficult to see what recourse a beneficiary might have.

It is good advice to try to ?persuade clients to appoint at least ?two executors in every instance, unless it is a spouse-to-spouse gift, so that, hopefully, one can keep a check on ?the other, and it is important that ?they should be of equal status. If it ?is uncle and nephew, father and son, ?that sort of thing, then there is the possibility that one might dominant ?the other. I remain a firm believer in ?a professional executor.