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?

The Executor’s Role and Duties

An executor is appointed in a Will to carry out the wishes of a person who has died. The executor organises collection of the deceased’s assets, pays any debts and distributes the assets to the beneficiaries as per the deceased’s Will. An executor’s duties include:

1. Arranging the funeral and cremation or burial of the deceased;
2. Locating the deceased’s Will and obtaining a Death Certificate;
3. Identifying the deceased’s assets and liabilities;
4. Obtaining probate of the deceased’s Will;
5. Selling the estate assets, paying any estate debts and taxation liabilities;
6. Defending the estate in legal proceedings such as applications contesting the Will; and
7. Distributing the estate in accordance with the Will;
8. Maintaining estate accounts and keeping proper records.

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. In the executor does not have a valid reason, they may become liable to pay the beneficiaries compensation for the delay.

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. Beneficiaries’ obligations include:

1. Preserving the estate for the beneficiaries’ benefit;
2. Acting personally, with such professional assistance as is required;
3. Avoiding acting in their own interest to the disadvantage or prejudice of the beneficiaries;
4. Acting efficiently and expeditiously to avoid the estate incurring unnecessary cost;
5. Acting impartially towards all beneficiaries, avoiding any preference to the interest or wishes of one over another;
6. Being mindful of the executor’s year in administering the estate;
7. Obtaining the best possible price in realising the estate assets;
8. Complying with directions and trusts in the Will or court orders affecting beneficiaries’ entitlements;
9. Avoiding delay in the investment and realisation of estate assets;
10. Making the assets productive for the beneficiaries;
11. Being aware of the duties and statutory powers of investment set out in section 14A of the Trustee Act 1925;
12. Keeping proper accounts and retaining all original receipts; and
13. Considering making interim distributions to beneficiaries if there are delays in administration of some assets or the estate is complex.

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, either before making an application for Probate or after Probate is granted, 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. These circumstances may include where the executor:-

1. has taken no steps to obtain Probate of the Will;
2. has otherwise neglected their duties;
3. has interfered with the estate;
4. is of bad character (have committed a serious crime or are in prison);
5. has misappropriated assets of the estate;
6. is overseas for a prolonged period;
7. is in ill health;
8. lacks legal capacity and are not competent to deal with the estate;
9. is of unsound mind, or
10. cannot be located.

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.

However, as 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 (‘PAA’)]. 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 PAA]. 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 Court 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.

The Court will consider what is necessary for the due and proper administration of the estate and the interests of the estate’s beneficiaries. In the case of incapacity, medical evidence will generally need to be submitted addressing the executor’s capacity.

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.

An executor has a very important role and the decision who to appoint as executor should be well considered. However, even when an appointment is made with the greatest of care, unexpected events can happen down the track which may impact on beneficiaries’ rights and entitlements. If you’re experiencing issues with an executor, the best course of action to take is to seek legal advice.

Here to Help

If you would like further information about removing an executor from their role or wish to update your current Will to nominate a different executor please contact us.