If there is a potential claim against the estate, the personal representatives must not take steps to distribute the estate. The claim should be fully investigated to determine whether it has merit. The personal representatives should consider early negotiation to try and resolve the issues. The personal representatives should keep the beneficiaries updated and try to obtain their permission to agree on any proposed compromise. If they are unsure whether to take a step, they can also apply to the Court for guidance and permission to take the steps proposed.
Do I have to go to Court to resolve a claim on the estate?
Most estate claims are settled without the need to go to court and will only result in a trial if a settlement cannot be agreed upon with the other parties. Avoiding going to court is beneficial for all parties, as once a claim goes to hearing, legal costs increase substantially, which ultimately leads to a reduction in the estate’s value.
You should consider early negotiation with the other parties in an attempt to avoid court proceedings. For example, parties will need to consider whether to make settlement offers and take part in alternative dispute resolution, such as mediation.
This can result in the matter settling more quickly and therefore helps keep legal costs to a minimum. However, if the case cannot be settled it may be necessary to issue court proceedings or continue with any proceedings already issued to progress the matter toward trial.
Once a settlement has been reached, your solicitor will need to consider how to conclude the proceedings by, for example, drafting a settlement agreement or preparing a deed of variation, which will detail how the estate is to be distributed.
Can I recover the legal costs of dealing with a dispute as executor?
Provided that it is reasonable to seek legal advice to resolve an issue, an executor may be able to have their reasonable legal costs reimbursed from the estate, before the estate is distributed to the beneficiaries.
This means that the costs involved in dealing with a claim against or involving an executor can result in reducing the amount of money a residuary beneficiary may receive from the estate. Therefore, these cost pressures may be used as a tactic to seek early resolution of disputes.