Avoiding common problems with beneficiaries

Whether the beneficiary of an estate is entitled to inherit a small personal item, a share or even the majority of the assets of the person who died, it can be a stressful time for them while they wait for probate to come through. Delays at the probate office are outside your control, but if you are an executor there are steps that you can take to avoid some common problems which can arise when dealing with beneficiaries.

Jessica Pye, an Associate in the wills and probate team with MacDonald Oates LLP in Midhurst explains, ‘No matter how large or small a beneficiary’s entitlement, problems can sometimes occur if assets are lost, if a will is unclear or has been poorly drafted, or if communications and trust break down. In such cases, it is a good idea to instruct a solicitor from the outset, as they can help to correctly interpret the will and can act as an intermediary between you and the beneficiaries.’

Jessica Pye looks at some of the common problems and how to avoid them.

Be clear about your legal duties

The first thing to do is to read the will carefully to make sure that you are aware of its terms and understand these. If there is no will, then you should familiarise yourself with the intestacy rules and seek legal advice if at all unsure.

Executors have many very strict duties and ignorance is not a defence against potential personal liability if these duties are not adhered to.

Communications

Executors have a duty to administer the estate in accordance with the interests of the beneficiaries. It is good practice to keep beneficiaries informed of progress, so that they think things are not being held up due to inefficiency, unnecessary delays, or anything more sinister.

You should communicate with the beneficiaries as early as possible in the process. Beneficiaries are entitled to be told that they are due to receive a share of the estate, as well as exactly what that share entails.

Avoid a conflict of interest

Appointing someone who is a beneficiary of a will as the executor is common and does not in itself give rise to a conflict of interest. However, any actions you take and decisions you make in respect of the estate as executor must be in the interests of the estate and all beneficiaries.

If you are aware of existing issues between yourself and any of the beneficiaries, then you should address these early to avoid being accused of any wrongdoing along the way. For example, if you have had any personal disagreements with another beneficiary in the past, you could reach out to assure that person that you take your role as executor seriously and that you intend to act in accordance with the will and for the benefit of all beneficiaries.

If you are appointed as executor alongside someone else, you may wish to ask your co-executor to take the lead in any communications with the difficult beneficiary to ensure that your personal issues do not get in the way of the estate administration. Alternatively, if you are the sole executor and you do not feel comfortable dealing with the beneficiary in question, you may appoint a professional to act on your behalf. This could simply be a case of the professional being appointed to deal with day-to-day matters relating to the estate administration, or you could appoint them as your attorney to act in your place.

Missing items

If you are the executor of a will that includes gifts of personal items then, you will need to deal with those items according to the specific terms of the will.

It is important to ensure that any property is not cleared too hastily. You, as executor, are responsible for searching for all personal items mentioned in the will, so you should not let others go through belongings until you are confident that you have read, and understood, the terms of the will and that you have secured all personal items mentioned.

If an item is cleared, or taken by another person, you could find yourself personally liable to the beneficiary for whom the item was intended.

Problems can arise if any items have been lost or given away during the testator’s lifetime. If you cannot locate any items mentioned in the will, what happens with that beneficiary’s entitlement is dependent on the exact wording of the gift. Whilst some types of gift would simply fail, others might have to be honoured in some other way instead, such as a monetary equivalent. If you have taken all reasonable steps to locate the item and cannot, then a legal professional can help you to determine the appropriate next steps according to how the gift is worded. If you mistakenly deem that a gift has failed when it should in fact have been substituted with a monetary equivalent, you would be personally liable for the beneficiary’s loss.

Interpreting the will

Problems can arise if a will was poorly drafted or homemade, especially if the terms of the will are unclear and you may struggle to decipher exactly who gets what from the estate.

Alternatively, a will that was well drafted and perfectly clear could be based on misunderstood instructions. Perhaps, the testator made promises to family members or friends during their lifetime which have not been honoured in the will.

Either way, you may end up dealing with a potential beneficiary who is disgruntled and you will need to tread very carefully to avoid things escalating into a legal dispute.

As executor, it is up to you to ensure that the will is correctly interpreted. If you are aware of any potential dispute, you should speak with everyone concerned to ascertain all the different positions. If you do not have the appropriate legal expertise, you should seek advice. If you distribute the estate incorrectly, lack of knowledge will not constitute a valid defence in any claim against you if you failed to obtain advice.

Exclusions

It could be that certain family members or friends were deliberately left out of the will, or perhaps there is no will and certain people are upset because intestacy laws do not provide for them.

You should listen to any concerns that beneficiaries or potential claimants may have, but avoid taking sides or making any statements about your views on their claim. If a case is brought forward, your words could be used against you or another beneficiary.

Aside from disappointed beneficiaries, a claim could be made that the will is invalid due to the testator not having had the requisite capacity when it was made, or being placed under undue pressure to make the will. In such a case, whilst it is important to communicate openly and to share what information you can about the will, you should ensure that you are only providing factual information and not opinions. If a claim is anticipated, it is important that you remain impartial between the existing beneficiaries and those seeking to make the claim.

Calculations and distribution

Towards the end of the estate administration process, beneficiaries should be provided with estate accounts. Keeping beneficiaries informed throughout goes a long way to help prevent disagreements.

A beneficiary may disagree with the valuations you have included for certain items, for example. Whilst it may not be practical to discuss every single estate asset with each beneficiary and to ensure their agreement to valuations obtained, you should make sure that you obtain professional valuations of all items in case of a later dispute arising.

How can we help?

The role of executor is a serious one that attracts strict requirements.

Professional legal advice will help you to ensure that you are aware of the legalities and that you deal with the estate, including liaising with beneficiaries, correctly and fully. Our solicitors can help you to be sure you have completed all steps required and to navigate any disputes.

Contentious probate is increasingly common and is tricky to deal with. If you receive any indication that someone may make a claim against the estate, you should contact us immediately.

For further information, please contact Jessica Pye in the Wills, Probate and Trusts team on 01730 819190 or email .  MacDonald Oates LLP has offices in Midhurst, West Sussex, and Petersfield, Hampshire.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.