Acting as an executor can be an onerous obligation. It is important at an early stage in the administration process to understand the responsibilities of an executor to avoid any potential negligence and personal liability. An executor should act diligently and endeavour to administer an estate within 12 months. Outside of that time limit the executor should have justifiable reasons for delays that arise.
When selling assets executors should achieve the best price possible. They need to take professional advice and ensure that they follow the views of the majority to avail of the protection afforded to them under Section 50 Succession Act 1965. The views of the majority must be exercised in good faith, and without personal motivation and/or conflicts of interest.
An executor is appointed under a will. The executor is responsible for the administration of the estate, identifying the assets and liabilities , protecting the estate during the course of administration, proving the will and, once the grant has issued to collect in the assets in the estate, discharging all liabilities and accounting to the beneficiaries for their inheritance/bequests.
There is no obligation on an executor to act. After the death of a testator the executor must decide whether to act or renounce (step aside). A decision to renounce should be taken early on before any action can be deemed to be intermeddling. If an executor has intermeddled in the estate they may only renounce with the consent of the High Court. If an executor renounces they cannot get involved in the estate at a later date.
An executor must distribute the assets of the estate in accordance with the terms of the will. They therefore owe a duty of care to the beneficiaries of the will. They equally owe a duty to the creditors of the estate to discharge any liabilities in a timely manner.
An executor must perform his duties diligently and if he fails to do so may be sued by the beneficiaries for any resultant loss. An executor must protect the assets from devaluation and in that regard ensure all property assets are insured for market value.
As some estates may be complex there is a grace period afforded to all executors to carry out their duties without fear of litigation. This is known as the executor’s year and is set out in Section 62 of the Succession Act 1965. The executor is under no obligation to distribute the estate before the expiration of a year from date of death of the testator. Any legacies which remain unpaid after a year may be eligible for interest from that date. After the expiry of a year any beneficiary can call upon the executor to give an account of his actions and the onus lies on the executor to substantiate reasons for the delay.
When appointing an executor to a will, it is important to ensure that the executor will not have any conflict with the terms of the will itself. If there is a belief that this will occur, then an alternate executor should be considered.
Recent Case Law
In Shaughnessy v Shaughnessy (2016) IEHC 303 the plaintiff sued the executor for negligence and breach of his duties and sought damages for losses suffered by her. The plaintiff had in her late mother’s will, received a one third share of all monies in the estate and a site of half an acre to be taken from lands given to her brother (who was the executor of the will). The testatrix died on the 7th September 2007. The executor initially commenced the administration process but had a change of mind some months later in 2008 due to having reservations on the validity of the will and it’s terms The executor had only been given a life interest in the farmland so he could never pass those lands onto his family as his interest would die with him. He had worked the farm for a number of years, and was greatly disappointed by his bequest.
Despite being repeatedly called upon to administer the estate and on notice of falling property prices from 2007 the executor did not progress the administration. The half-acre site given to the plaintiff had fallen in value from €70,000 to €25,000 by October 2012.
The plaintiff also claimed a loss of €46,000 on a property which she acquired in Estonia, arguing that had the estate been administered diligently she would have been able to service her loan on the property and not suffered this loss.
The court found that the executor failed in his duty of care to the estate and the plaintiff as beneficiary. The executor had prevaricated unnecessarily and was therefore guilty of negligence.
The court held that the loss of €46,000 on the Estonia property was not recoverable as the loss was not foreseeable by the executor. As the executor was not notified that the plaintiff was at risk of losing her apartment this was held by the court to be detrimental to this claim.
However, the court held that the transfer of the half-acre site was always a simple task and that the two years taken to vest the property in the plaintiff was not acceptable. The executor was on notice of falling land prices. Had the estate been administered diligently the court believed the net loss to the plaintiff of €30,000 would not have d been incurred and accordingly awarded this to the plaintiff. The executor was personally liable to compensate the plaintiff.
In Aideen Doyle (o/w Clodagh White) v Niamh White and Derval White (2017) IEHC 44 the plaintiff complained that the executors failed in their duty to her as beneficiary by not obtaining the best price on the sale of the deceased’s home.
The court held that executors have a number of fiduciary duties to beneficiaries namely to act with due diligence, to act with the care that might reasonably be expected from a careful person in the prudent discharge of their own business and the duty to maximise the value of the estate.
In some instances a will may provide for assets to be sold. In those instances executors are obliged to take proper advices from estate agents and secure the best price possible for the property. In the absence of an explicit direction a will to sell in an executor may sell assets to satisfy debts in the estate. Section 50 of the Succession Act 1965 allows an executor to sell assets where that is supported by the majority of beneficiaries within the will by value. This will not prevail where the majority view is entirely unreasonable and dilutes the size of the estate. Such situations would arise in the case of conflicts of interest, bad faith and negligence.
Executors who follow the majority view, which is an unreasonable view cannot be exonerated. The mandate of the majority will provide implicit protection to executors. However this is only where the majority is exercised in good faith and not where it results in a loss to any non-consenting beneficiary to the extent that is constitutes gross negligence.
Therefore the court held that no loss was suffered where the executors followed the views of the majority of the beneficiaries particularly where that was exercised in good faith without any conflict of interest.