Dealing with executor disputes involving a charity
Executor disputes involving a charity are frustratingly common. Conflict commonly arises when executors cause delay, fail to administer the estate in accordance with their duties, or simply do not know what they should be doing. When an executor dispute occurs, trustees should take specialist legal advice from experienced contentious probate solicitors.
Resolving an executor dispute without involving the court
In the first instance the charity should explore solutions that do not involve the courts.
Establish a clear line of communication with the executor. Help them to understand your concerns and what action you would like them to take.
A problem executor can be invited to renounce or voluntarily step down (with a neutral professional executor being appointed to replace them). You can also suggest that the executor instructs an agreed firm of solicitors to finish administering the estate.
If these tactics do not work, the charity has the option of applying to the Probate Registry or the court for directions to be given as to what the executor should and should not do. Although this involves a court application being made, it is more straightforward than applying to remove an executor and it carries a much smaller risk of an adverse costs order being made against the applicant.
Applying to remove an executor
When a charity’s position is being seriously prejudiced by a problem executor, there may be no option other than to take steps to have that executor removed.
If a grant of probate has not already been issued, then the charity can consider asking the court to exercise its discretionary jurisdiction to pass over an executor pursuant to Section 116(1) of the Senior Courts Act 1981.
This power can be used where there are “special circumstances” that would justify the executor being passed over and it is necessary or expedient to do so.
Where a grant has already been issued then the court has the jurisdiction to remove an executor under section 50(1) Administration of Justice Act 1985.
Neither of these options should be pursued lightly, as the courts are generally reluctant to interfere with a testator’s choice of executor. The key consideration will always be whether removal is in the interest of the proper administration of the estate and would promote the welfare of the beneficiaries.
It is worth bearing in mind that friction or hostility between the charity and the executor will not be enough in itself to justify removal unless it is obstructing the administration of the estate.
As ever, the issue of legal costs should be uppermost in the minds of trustees. Removal proceedings can be very expensive and should therefore be regarded as a last resort.
Seeking an account
When a charity has concerns about the way in which the finances of an estate are being handled by an executor it can seek an order of the court requiring the executor to provide an account.
Executors have a duty to keep records and produce accounts detailing the assets and liabilities, the income and expenditure of the estate. Where there is concern about the financial management of an estate then the charity can seek an order of the court compelling the executor to provide accounts and allow inspection of receipts.
This will enable to charity to examine the assets, debts, expenditure, remuneration and distributions, and to then assess whether the estate has been administered correctly.
In cases where there is an allegation of ‘wilful default’, the executor can also be required to account for what should have been received, rather than simply what has been received.
As with all applications to the court, efforts should first be made to resolve matters informally. The court will expect the parties to have attempted to do so and an adverse costs order can be imposed on parties who refuse.
We recommend starting by asking the executor for the information that you require and providing a reasonable time frame for a response. Before issuing the application a letter before action should be submitted, identifying the issues of concern, the court order you will be seeking, and the steps the executor should take to avoid your application being made.
We find that the threat of personal costs can often bring the most recalcitrant executors to their senses, thereby avoiding the need for court action to be taken.
No Win, No Fee funding
We are able to consider funding executor disputes involving a charity on a No Win, No Fee basis.
We believe we are one of just a few specialist firms to offer No Win, No Fee funding to charities involved in an executor dispute.
No Win, No Fee funding is popular with charity trustees who are concerned about fulfilling their duty to limit the organisation’s exposure to legal costs.
When dealing with an executor dispute on a No Win, No Fee basis it is important for us, and for you, to be clear about what outcomes will constitute a ‘win’. We will therefore start by assessing the dispute free of charge, before going on to discuss your expectations and objectives with you, and explaining how No Win, No Fee funding will operate in your particular case.
Free legal helpline
If you would like to talk to us about executor disputes involving a charity, then contact us by emailing [email protected] or phoning us free on 0333 888 0439.
