What Happens If I Don’t Trust The Executor? (Vic)
Executors have extensive powers to act on behalf of a deceased person in administering their estate. An executor of an estate collects and secures the assets, often transferring real property into their own name. Executors have a fiduciary duty to protect these assets and distribute them to the rightful recipients. Most executors perform their role honestly and in the best interests of the estate and the beneficiaries. However, an executor can also abuse their position of trust for their own interests. This article explains what can be done on the rare occasions when there is a legitimate reason not to trust the executor.
Testators Trust The Executor With The Estate
An executor is the testator’s “personal representative” in the administration of the estate. The Administration and Probate Act 1958 authorises executors to act in place of the deceased and gives them broad powers over the estate. The executor can sell property, empty bank accounts and transfer real property into their own name until the distribution of the estate occurs. An executor can even deviate from the will’s terms when necessary to discharge estate debts and settle claims against the estate.
The executor has a fiduciary duty to protect the estate’s interests as well as the beneficiaries. Therefore, it is vitally important that the executor is someone that the testator trusts. The testator often chooses a person who is the major beneficiary to act as executor, as the executor is then working to protect their own interests. Alternatively, the testator can appoint a friend or extended family member who is not a beneficiary to act as executor as they will be impartial. This is a prudent approach, especially where there is potential for conflict between beneficiaries. For more complex estates, the testator may even decide to engage a professional (usually a solicitor or accountant) to act as their executor.
Relationship Between Executor And Beneficiaries
Beneficiaries should remember that although the executor works to protect their interests, they do not work directly for the beneficiaries. The executor’s duty is to the estate and they are not required to report every step they take to the beneficiaries. However, it is in the interests of everyone for the heirs of an estate to develop a good relationship with the executor so that open communication can occur
Estate administration in Victoria can take much longer than a lot of beneficiaries expect. The executor usually has to undertake a number of practical activities and often must wait for the Supreme Court of Victoria to make a grant of probate. Even after the executor has obtained probate, it is prudent to wait for a minimum of six months before distributing the will’s bequests. This delay is necessary as a claim could be made against the estate. If the executor distributes the assets too early, they can be personally liable for any loss. While this delay is standard, some beneficiaries may believe that the executor is being unreasonable or even that they are concealing malfeasance.
A beneficiary should only be concerned by delays when they cannot be explained by the executor. If an executor provides the beneficiaries with updates on the estate administration process, then they should not be concerned about short delays. Other signs that beneficiaries may not be able to trust the executor include:
- They are using the deceased’s bank accounts for unexplained transactions. All debts and costs of the estate should be carefully documented and the executor should not withdraw cash that cannot be traced from the deceased’s bank accounts.
- They are living in the deceased’s house. It is sometimes necessary for sn executor to live in an estate property for a short time in order to secure the premises or reduce their accommodation expenses. However, this should be a short-term arrangement.
- The executor is paying themself advances from the estate. It is irregular for an executor to receive an advance from the estate even if they are a beneficiary of the will. However, an executor may receive an advance payment where the circumstances warrant an interim distribution to all beneficiaries.
- The executor is intimidating beneficiaries. While a beneficiary should respect the executor’s authority, there is no excuse for them to intimidate or mistreat a beneficiary. If an executor does this, the beneficiary should contact a lawyer immediately.
- The executor is claiming expenses without documentation. An executor is entitled to be reimbursed for expenses they have incurred in administering the estate. However, these expenses should be reasonable and documented. For example, an executor cannot charge the estate for luxury travel and accommodation unless this is appropriate, given the testator’s instructions and the estate’s overall size.
- The executor is selling assets of the estate to close associates. The executor must resist selling estate assets privately to their friends and associates, even if this will “save the estate” time and money. All asset sales must be arms-length and at market value. If an executor is selling assets to close associates, this is a red flag.
- The executor is excessively delaying financising the estate. As noted above, beneficiaries should not be surprised if there are delays in the estate administration. However, if there are long, unexplained delays, this may be a red flag.
What To Do If You Don’t Trust The Executor
A beneficiary who does not trust an executor should first consult with the other beneficiaries.
If the other beneficiaries think the person is acting dishonestly, then the beneficiaries can apply to remove them. Only the Supreme Court of Victoria can take the powers of an executor away.
If you require legal advice or representation in any legal matter, please contact Go To Court Lawyers.