Cases involving a former solicitor, Linda Box, who misappropriated estate funds are currently before the Courts. Ms Box was jailed in 2017 for fraud, theft, and forgery, having stolen millions of pounds from clients during her years in practice.
It can be quite uncomfortable for us as lawyers to discuss the black sheep who find themselves on the wrong side of the law, however Ms Box’s case in particular has raised several interesting points. The cases which are now before the Courts are being brought by charities who were beneficiaries of estates administered by Ms Box. They are claiming loss suffered by them as beneficiaries due to Ms Box’s criminal activity. They have also brought the claim against Ms Box’s co-executor, Julian Gill and the firm’s insurers.
It is not uncommon to include several parties to such claims, however the availability of three potential sources of compensation are particular to the fact that there were solicitors involved.
There is no suggestion that Julian Gill was aware of Ms Box’s criminal activity, however as an executor of the estate he will remain personally liable for loss suffered by the beneficiaries. The role of an executor is always an active role and so all executors can be held equally liable for losses to the estate, particularly where there are elements of fraud or theft. Many people take on the role of executor presuming that they will only be responsible for their own actions. The role of executor is a fiduciary role, and so in some respects the executors will be treated as trustees. This means that an innocent executor will still be liable for losses suffered, however they can apply to the court for relief under s61 Trustee Act 1925. This relief is granted at the discretion of the Court and is only likely to be granted if the beneficiaries have other sources of compensation available to them.
The availability of professional indemnity insurance can be a life line for many claims. Generally speaking individuals will not have funds available to reimburse beneficiaries, particularly where they have not personally benefited from the fraud. Insurers offer a ready source of money and it is a requirement for solicitors to have insurance in place to protect members of the public and clients if there is ever negligence or fraud. In this particular instance, the ability to claim against the insurer is being challenged based on the total amount of compensation paid out on all claims so far, which the insurer states has reached the maximum pay out value on the policy. This is based on all the claims to date being amalgamated and the Court is yet to decide whether to allow this amalgamation.
Finally, Ms Box herself has been included as a party as she is the person most likely to have caused loss to the beneficiaries. If she has personal resources which have not been seized as proceeds of crime, then the charities would be able to claim compensation from these.
For clients, one of the main points to take away from this case is the extended liability of innocent co-executors. If you are ever acting as an executor and you have concerns about your co-executor’s actions then you should immediately seek legal advice.
The fact that Ms Box was a solicitor means that the beneficiaries have more avenues available to them when seeking compensation. Any executor can act dishonestly, however where lay executors are involved there is unlikely to be insurance in place and therefore less money available to settle any claims. We would always advise clients with a larger estate to consider the appointment of professional executors to maximise the protection available to the beneficiaries.
If you would like to discuss the role of executor, or require advice about your estate planning then please contact a member of our Wealth Management Team.