The role of executor can be a complex one, and we have warned in a previous blog about the need to think very carefully before appointing friends or family members as executors. The task can be very involved and time consuming. It involves gathering in estate assets, preparing accounts, declaring and paying the correct tax, and distributing the estate amongst the beneficiary as set out in your will. The tax matters may be very complicated, difficult to understand, and disastrous to get wrong.
We have previously discussed what would happen in circumstances where an executor did not want to act. In those cases, an executor may renounce, reserve power, or be removed by the court however, what happens if the executor does want to act, but the beneficiaries don't want them to and have asked them to step down? Are they required to step down? If they refuse, is there anything the beneficiaries can do?
Why might a beneficiary want an executor to step down?
There are many reasons that a beneficiary or all of the beneficiaries under the will might want an executor to step down. In the case of lay executors (i.e. not professionals) this might be because the beneficiaries feel that the executor does not have the expertise to be able to manage the estate, because there is some dispute between the executor and the beneficiaries, or perhaps the executor is also a beneficiary and there is a dispute between the beneficiaries, or simply because the beneficiaries want to administer the estate themselves.
In the case of professional executors, beneficiaries may wish for them to step down simply to save costs.
Can an executor step down because a beneficiary has asked them to?
That answer to this is ‘yes’ but I would caveat that the ease and costs of doing this really depends on the stage the estate has reached. If an executor is asked to step down at the very beginning, the executor could renounce probate at that stage, and either allow the other remaining executors (if there are any) named in the will to continue, or one or more of the beneficiaries named in the will to take over the administration.
However, if the executor has already taken steps to deal with the estate's assets, and in particular if they have taken a grant of probate, renunciation is no longer available to them. This is because the executor has then "intermeddled" with the estate, and can no longer be removed without an order of the court confirming the removal.
Executors who don't have the expertise to deal with the estate
If the executor is unable to deal with the estate either due to lack of expertise, or perhaps they are not dealing with it due to lack of time, the beneficiaries may ask them to stand down. If the executor has not intermeddled with the estate, they can do so by agreement. However, if the executor has intermeddled with the estate, the parties would need to file an application with the court.
If the executor does not have the ability to deal with the estate and refuses to stand down, this may be grounds for the beneficiaries to apply to the court under section 50 of the Administration of Justice Act for an order removing the executor. An executor does not have to agree to stand down in any circumstances but if they are failing in their duties by either refusing or being unable to administer the estate, this would likely be compelling grounds for the court to remove them. An executor who unreasonably refused to stand down despite being unable or unwilling to carry out their role would likely face a significant personal costs risk if the beneficiaries were forced to issue a court application. The court will need to appoint someone in the executor's place and if appropriate to do so they may appoint one of the beneficiaries, or alternatively the parties may propose an independent professional to take over the administration.
Executors standing down where there is a dispute
It is not uncommon that executors may be one of the beneficiaries or closely related to the beneficiaries. When disputes arise, allegations that the executor is compromised as a result of the dispute often quickly follow.
Where it is believed that the executor is conflicted and should step down there are a number of ways of dealing with this:-
- the executor may agree;
- as above the beneficiaries may apply to the court;
- where the executor is a party to proceedings, they may give an undertaking to the court not to administer the estate until an order of the court. This doesn’t remove them as an executor and allows them to continue the administration once the dispute is over, but gives the beneficiaries some confirm that the estate assets are protected until the dispute is resolved;
- if the executor refuses to give such an undertaking and if for some reason the beneficiary did not want them to stand down but merely to not take steps to administer the estate, the beneficiaries could lodge a caveat and if appropriate obtain an injunction requiring the court to order the executor not to take any steps in the administration.
Professional executors
There is no obligation for professional executors (or any executors) to agree to stand down. In circumstances where there are professional executors appointed, in most cases where the beneficiaries then wish to take over the administration themselves, and there are no reasons why they would not be able to do so, I would expect the professionals to agree to this and either renounce or agree to an order for their removal depending on the stage the administration has reached.
Circumstances where the professionals may refuse to do this, or perhaps refuse to do this unless another independent professional is appointed in their place, might include:-
- a dispute between the beneficiaries which means there is no one appropriate to take their place;
- none of the beneficiaries having the capacity to be able to administer the estate; or
- an extremely complex estate where the beneficiaries would not be able to conclude the administration.
All executors are bound by obligations to the beneficiaries and to the estate. It would be surprising that a professional would not step down if all of the beneficiaries had agreed (though they may request an indemnity from those beneficiaries for any claims against the estate). However, if all the beneficiaries did not agree the professional executor may either refuse to stand down, or in some cases may apply to the court for guidance as to what they should do.
However there certainly have been some cases where professionals without any of above factors above have refused to stand down. The court will require some persuading that the estate was not being administered and/or it was in the best interest of the beneficiaries for the executor to be removed before an order would be made. In many cases, the fact that the estate is extremely simple, and therefore the professional executor’s fees were disproportionate to the amounts being claimed, may be so enough to persuade the court. However that would likely to depend on the judge on the day. It must also be borne in mind that an application to remove executors is an expensive step in and of itself and might sometimes outweigh the cost that would be incurred by professional executor in administering the estate anyway.
Summary
It is important when considering your will to select your executors very carefully. You should discuss with your solicitor whether it is appropriate to have professionals appointed e.g. if you have a complex estate or a high likelihood of a dispute. If you are not appointing professionals, it is important to consider whether your executors are likely to be in a position to administer your estate at the time of your death. Whilst wills are somewhat morbidly drafted as if you were to imminently pass away, it might be many, many years before your executors have to step into that role. It is therefore worth keeping under review whether they remain the best people for the job. For example, an executor cannot act if they lose mental capacity. If your executors are now quite elderly and perhaps have cognitive issues or degenerative illnesses affecting legal capacity such as dementia or Alzheimer's, they may no longer be the most appropriate people to act. It is often cheaper and easier to address these issues during your lifetime than to leave your beneficiaries to deal with them after your death!
If you are in a position where you would like an executor to stand down, we can help you with applications for removal.
If you have any queries regarding anything raised in this article please contact Kezia Brown by email or on 01494 893504.