Slow or sloppy executors – when you can be personally liable for delays and bad deals
If you’re an executor of a Will, it can take a long time to sort out the deceased’s affairs (lawyers say ‘administer their estate’), but that’s no excuse for hanging about. You’ve got to be ‘diligent’ – get cracking, and make a good job of it – or you can end up with legal liabilities. The test is that you have to behave as if you were a reasonably careful person, and the assets in the estate were yours personally.
That also includes getting the best price available when selling the assets in the estate. That may mean you need a professional valuation. It can also mean that, if an asset such as a house or flat drops in value before it’s sold because you have been faffing about without good reason, you could be sued by the beneficiaries and have to compensate them for the drop in value personally. You can also be liable if the asset is damaged – there’s a fire, say – and it should have been insured for market value, but you hadn’t got around to that yet.
You can’t be sued for delay in the first 12 months (sometimes called the ‘executor’s year’), but if the administration lasts more than 12 months any beneficiary can demand that you explain why, and you need to have justifiable reasons or you could be at risk of legal action.
Of course, if the estate is large and complex, there may be good reasons for your delay – but make sure you have them at your fingertips, in case you’re challenged.
In one case a beneficiary claimed compensation for negligence from an executor. The Will-maker had died in September 2007 and left a third of her estate and half an acre of land to her daughter. The executor, who felt let down by the Will-maker because he hadn’t inherited what he thought he should (and also had some doubts whether the Will was valid), let the administration slide.
The beneficiaries were constantly on at him about administering the estate, and he was also aware that property prices were dropping fast, but he still delayed. By October 2012, the value of the daughter’s half acre had dropped by €45,000, from €70,000 to €25,000.
In the court proceedings that followed the court agreed with the daughter that the executor had procrastinated without good reason and negligently failed in his duty to distribute the estate within a reasonable time. It said that transferring the half acre could easily have been dealt with within two years after the death, in which case it would only have dropped in value by €15,000, not €45,000. It therefore ordered the executor personally to pay her €30,000 compensation.
The daughter had also claimed €46,000 that she said she had lost on a property in Estonia because, without the proceeds of sale of the half acre, she had been unable to pay the mortgage on it. The court said that was too remote a consequence, because the executor had not been put on notice by her that losing that property was a potential outcome of his dithering. So, it’s possible that if she had told him about that, he would have been liable for that loss too…
The law also say that an executor has to listen to a majority of the beneficiaries if they tell you what they think you should do with the estate – although you’ve got to be confident that each of them is acting in good faith, and there’s no conflict between their interests and those of the estate as a whole and/or they aren’t acting just to benefit themselves.
Finally, as an executor you also owe a duty to the Will-maker’s creditors to pay the money due to them out of the estate within a reasonable time.
Clearly, being an executor can carry legal liabilities and, if you think you aren’t up to it, either because it’s too hard or you’re too busy, you can ask your solicitor to help. Or if you don’t want to be an executor at all, you can always get legal advice on how you can opt out of – ‘renounce’ – your executorship.
In contentious business, a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.