What steps can an independent administrator take to resolve disputes between the beneficiaries and/or personal representatives?

Appointing an independent administrator can be a sensible and/or necessary decision in many different circumstances. This is often the case where a dispute has arisen between the beneficiaries and/or personal representatives.

A key function of an independent administrator is to act neutrally and impartially, in the hope that any issues can be resolved by agreement – so that the significant costs of Court proceedings can be avoided. However, there may be some situations where an independent administrator will need to take formal steps to resolve disputes through the Court. For example, where an agreement has not been possible and a dispute is preventing the administration from concluding.

Disputes between beneficiaries and/or former personal representatives

Occasionally, estate administration can be deadlocked by issues such as:

1. Disagreements over the validity of estate expenses,
2. Arguments over whether an estate property should be sold, or who it should be sold to,
3. Disputes about who should acquire certain estate possessions,
4. A beneficiary claiming that the estate owes a debt to them.

Initially, the independent administrator will try to facilitate all of the parties reaching an agreement over such issues. The independent administrator is, by definition, independent of all interested parties, with no financial interest in the outcome of any disputes. This means they will be able to present suitable ideas for ways to move forward and narrow the issues, without being sidetracked by the personal concerns that often go hand in hand with estate disputes.

If the parties cannot come to an agreement, then the independent administrator can issue a Court application under Part 64 of the Civil Procedure Rules. In this application, an independent administrator can ask the Court to determine any question that stems from the administration of an estate. Potential claims can include:

1. A claim for a determination of any question about the rights or interests of a person claiming to be entitled under a Will or on the intestacy of a deceased person,
2. A claim for an order approving any sale, purchase or other transaction by them,
3. A claim seeking a determination of any issues between the beneficiaries which are preventing the estate accounts being agreed and finalised,
4. A claim seeking Court approval of the proposed estate accounts.

The application must be brought by filing a claim form and accompanying witness statement with the Court, setting out the background and reasons why the determination is being sought. A key requirement is that this evidence in support of a claim must set out what consultation, if any, the independent administrator has had with beneficiaries and the outcome of these discussions.

An independent administrator can therefore resolve a dispute by asking the Court for a determination of an issue and/or by seeking permission to take a particular step in the estate administration in order to resolve a dispute. However, the goal will always be to resolve matters without the need for Court intervention, so that the significant costs of this process can be avoided.

Claims by an independent administrator against the beneficiaries and/or former personal representatives

Once they have reviewed the relevant documents and any progress already made in the administration, the independent administrator might find themselves in a situation where they need to rectify the actions of a former personal representative. This is likely to occur if an independent administrator needs to recover estate funds or seek compensation for any loss caused (or profit made) by a former personal representative.

With former personal representatives, they may have failed to act with reasonable care and skill, and/or breached their fiduciary duties, which could include failing to follow the Will’s instructions or selling assets at undervalue. If these failures or breaches have caused a financial loss to the estate (or they have profited from their role – in breach of their duties), the former personal representative may be personally liable for compensating the estate.

In terms of beneficiaries, the precise steps an independent administrator can take depends on what the beneficiary is alleged to have done. It might be that the beneficiary owes the estate a historical debt, or needs to account to the estate for assets, in which case an independent administrator will need to liaise with the beneficiary to recoup this money or asset for the estate. If the beneficiary contests matters, and this is preventing the estate accounts being finalised, then a claim may need to be issued to seek the Court’s determination of this issue, or a civil claim brought to recover the debt or asset.

If such claims need to be issued, the independent administrator should consider whether a Beddoe relief application is required before commencing a claim. This application asks the Court for permission to enter into or defend proceedings on behalf of the estate. The purpose of this Order is that it grants an indemnity to the independent administrator for any cost they incur when litigating claims, including adverse costs. If a Beddoe application is not made, then the independent administrator risks being personally liable for their costs and the other parties’ costs – if the Court considers their approach to have been unreasonable. Although the independent administrator can argue that these costs should be charged to the estate, it is always recommended that a Beddoe application be considered to provide certainty.

If you need assistance with any of these issues, please do not hesitate to contact one of our specialists, who will be happy to help.

Upcoming seminar: Dealing with problematic Personal Representatives – pre and post removal

Don’t miss our upcoming seminar dealing with problematic personal representatives on 23 April from 18:30. Tom Dickinson and Elliot Booth will explore the Court’s current approach, recent case law, and the practical options available to beneficiaries and Personal Representatives when concerns arise in the administration of an estate. Register now to secure your place.