Will makers are entitled to choose whomever they wish to be their executor. But what can beneficiaries do if they believe that the nominated executor is failing to administer the estate, or is acting fraudulently or not in the beneficiaries’ best interests?

What is the “Executor’s Year”?

The courts have developed a “rule of thumb” when determining what is an acceptable timeframe for the administration of estates and the payment of bequests to beneficiaries. Because an executor’s duties include the sometimes slow task of obtaining a grant of probate and discharging the deceased’s debts, the courts have determined a general rule that the executor has one year from the date of the deceased’s death (called “the executor’s year”) to finalise the estate administration and distribution to the beneficiaries.

If an executor fails to realise and distribute any estate assets within the executor’s year, they are obliged to establish some valid reason for the delay. If the executor does not have a valid reason, they may become liable to pay the beneficiaries compensation for the delay.

What are an executors obligations towards beneficiaries?

An executor stands in a fiduciary relationship to all of an estate’s beneficiaries, meaning a relationship of trust. This relationship is central to the obligations of the executor and to the rights of the beneficiaries. The executor is entrusted with the estate assets and the power to administer the estate for the benefit of the beneficiaries and must discharge their duties with care and loyalty to beneficiaries.

Executors behaving badly

Generally, a Will maker can appoint any competent person aged 18 and over as their executor and prima facie, that person is entitled to apply for and obtain a grant of probate of the Will following the Will maker’s death.

However, circumstances may prompt the beneficiaries to question the executor’s capacity and/or their ability to deal with the estate in accordance with their obligations.

The Courts will not lightly interfere with a Will maker’s discretion to appoint an executor of their choosing. The Court’s initial position is generally that the will maker made a considered judgement about appointing their executor and held the view at that time that the person appointed had the ability to complete the role competently and fairly.

The Court is primarily concerned about the due and proper administration of the estate and the interests of the beneficiaries. If there is ample evidence that an executor is not complying with their duties and their conduct is serious enough to warrant their removal as executor, the Court will disregard the will-maker’s right to choose their executor to ensure protection of the beneficiaries’ interests.

“Passing Over” and removing executors

If an executor is relieved of their duties before probate has been granted, they are “passed over” as executor by a Court order [made under section 74 or 75 of the Probate and Administration Act 1898 (NSW)]. In effect, the executor is removed before they have a chance to legally act as executor.

If an executor is to be removed after probate has been granted, the executor’s grant of probate must be revoked [pursuant to section 40(C)(3) of the Probate and Administration Act 1898]. This brings their executor duties to an end. In that event, a fresh application must be made by another person to obtain a new grant.

Interested parties (e.g. beneficiaries), can apply to the Supreme Court of NSW to have the executor passed over or removed. An application to the Supreme Court must be supported by evidence as to why the executor should be removed or passed over.

In the case of incapacity, medical evidence will generally need to be submitted addressing the executor’s capacity.

The Court will consider what is necessary for the due and proper administration of the estate and the interests of the estate’s beneficiaries.

The Court also needs to consider whether incapacitation of the executor is likely to be temporary or permanent. If it believes that the executor is likely to recover from their incapacity, it may make a limited order that someone else can act on the executor’s behalf while the executor is incapacitated. An order that someone else can permanently take over as executor is made when the executor’s incapacity is permanent.

If the executor is passed over or removed and the Will does not appoint a substitute executor, the applicant may ask the Court to appoint someone else as the administrator of the estate.

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