If you are appointed as an executor, it is your role to distribute the estate according to the terms of the Will. For more information on the role of an executor see our blog here. Read on if you know what is expected of an executor but are not sure what to do if you find yourself in the unfortunate position of either not knowing a beneficiary, or a known beneficiary is missing.
Is It My Job as Executor to Find Beneficiaries?
It may come as a surprise to learn that ultimately it is the responsibility of an executor to search for missing beneficiaries. Now that is not to say you are expected to turn into the world’s greatest detective and track them down. No, rather you must show that you have made reasonable efforts to try and locate any missing or unknown beneficiaries.
What Are the Consequences If I Don’t Try and Find Them?
Should you make any distributions to the other beneficiaries without having taken reasonable steps to locate a missing or unknown beneficiary and you have not obtained the requisite protections, you could be personally liable to pay the absent beneficiary’s share should they resurface and come looking for their inheritance. If you’re reading this as a soon to be executor of a friend’s estate don’t panic. There are steps you can take to mitigate any liabilities you may have, see below to find out steps you can take to avoid any claims against you.
Practical Steps to Locate a Beneficiary
Ask around – If a beneficiary cannot be found, whether you know them or not, the first step is to ask the deceased’s friends and relatives if they know where the beneficiary might be.
Place notices in the papers – If you know the beneficiary but just cannot find them, you can place a notice in the local newspapers (known as Section 27 notices) to the deceased as well as the local papers of the last known location of the beneficiary. Whilst these notices don't eliminate the risk of a claim being brought against you, they do offer some protection and placing a notice is a relatively simple and inexpensive process (which can be paid for out of the estate).
Appoint a genealogist company – These companies specialise in locating beneficiaries and can also assist with providing documents to prove a person’s entitlement to an estate such as birth certificates. This is especially relevant to situations where the deceased has died without a Will, there are no immediate relatives and you have taken on the role of administrator.
How To Protect Yourself If You Still Cannot Find a Beneficiary
Set aside the missing beneficiary’s share in case they turn up – This is practical for smaller estates and would mean payments to the other beneficiaries can go ahead. The missing beneficiary has 12 years to make a claim. If you decide to do this, it is important to understand your obligations as an executor will be ongoing whilst you held the funds.
Get an indemnity from the other beneficiaries – This would involve distributing the estate in full to the known beneficiaries and getting a written agreement from each of them confirming that if the missing beneficiary ever comes forward, they will pay their share towards their inheritance. This can be risky option for an executor as ultimately you are the one liable to repay the sum personally to the missing beneficiary if the other beneficiaries are unable or unwilling to pay.
Obtaining an insurance policy – This enables you to distribute the estate whilst taking out an insurance policy, which will pay out if the missing beneficiary is traced. The costs for the premium would be paid by the estate meaning you did not lose any money personally.
Applying to court for an order known as a Benjamin Order – The court will make the order on the presumption that the missing beneficiary has died. If the beneficiary comes forward later, they can still try to claim their share of the estate from the other beneficiaries, but the executor or administrator is protected by the Benjamin Order. This however can be a very expensive and time-consuming process.
Deciding which option to take should be a considered one. An executor needs to consider the size of the estate and the risk of a claim occurring. The method by which an executor protects themselves should be determined by the situation. For example, if the estate is not very big, it would perhaps be inefficient and disproportionately costly to apply for a Benjamin Order.
Whatever you choose to do, it’s advisable to take specialist advice to ensure that you, as the executor or administrator of the estate, are protected and that you do not become personally liable.
If you would like more information about your duties as an executor of a Will, please contact any member of our Wealth Management and Taxation team on 01494 521301.