What can a charity do about financial mismanagement of an estate?
One effective option when a charity has concerns about the way in which the finances of an estate are being handled by an executor is to 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 the administration 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 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.
Other options for resolving matters informally without the need to involve the court include inviting the executor to renounce or voluntarily step down (with a neutral professional executor being appointed to replace them) or arranging for the executor to instruct an agreed firm of solicitors to finish administering the estate.
If you have concerns about the financial management of an estate in which your charity is a beneficiary then please contact our free helpline by calling 0333 888 0439, or emailing us at [email protected]
