Removal of Executor (Vic)
One of the most important decisions that a person makes when drafting their will is the selection of a person to act as executor. Even with careful planning, not every executor is ultimately able to discharge the duties of the role. Occasionally, it becomes necessary to file for the removal of the chosen executor because they want to renounce their duties, or because they are not acting in the best interests of the estate and the beneficiaries. This article outlines the process for replacing an executor in Victoria, with reference to a recent Supreme Court case.
Executor Of Estate
The task of being an executor can be time-consuming and is best suited to someone with attention to detail, patience and good communication skills. A testator should select a person who will act appropriately and competently to take on the role of executor. Most testators choose a spouse, family member, or close friend to be their executor. Some testators prefer to engage a professional like a lawyer or accountant to act in this role to lessen the burden on their family and friends.
The Responsibilities Of The Executor
The person appointed as executor is responsible for administrating the deceased estate. This means communicating with interested parties, collecting the deceased’s assets, paying any of their debts and generally safeguarding the estate until it has been finalised. The executor must also protect the assets until they are transferred to the beneficiaries, whether that means taking out insurance on real estate, arranging storage of valuables, or representing the estate against legal claims.
Removal Of Executor
The responsibilities of being an executor can be an unexpectedly heavy burden and it is not unusual for a person to regret taking on the role. In Victoria, an executor who has already started acting can only voluntarily resign with the permission of the Supreme Court. The Administration and Probate Act 1958 makes provision for an executor to renounce probate and for another person to be appointed to replace them in administrating the estate.
The legislation also allows for the involuntary removal of an executor. The Supreme Court can remove a person who is unfit to act as executor or if their continued appointment threatens the due and proper administration of the estate or adversely impacts the beneficiaries’ interests.
The court has been reluctant to define exactly when the removal of an executor is justified. Generally, it is cause for concern if the person is delinquent in their duties. Previous court decisions have emphasised that the motive behind an executor’s misbehaviour is irrelevant. Therefore, it makes no difference whether the executor failed because of carelessness, incompetence, or malicious intent.
The court has historically found that an executor is unfit when they:
- are bankrupt or convicted of a serious offence;
- neglect their duties;
- cause undue delay;
- fail to adequately communicate with the beneficiaries;
- fail to act in harmony with a co-executor; or
- display a disqualifying conflict of interest.
Case Study On Removal Of Executors
The question of whether a conflict of interest justifies the removal of an executor was considered in the 2021 Supreme Court of Victoria case, Connock, Barbara Faye v Connock, Richard Anthony (in his capacity as executor of the estate of Connock, Dr Richard Hugh Shephard). The court referenced an early decision on this issue, Monty Financial Services v Delmo (1996), which established that an executor’s “unfitness to act” could be based on the conflict of interest, but that not every conflict of interest amounts to cause for the removal of an executor.
In this case, the plaintiff was the widow of the deceased and was applying to remove the executor, who was the deceased’s son from a previous marriage. The plaintiff claimed that the executor had a conflict of interest as the prospective beneficiary of litigation against the estate. In essence, the plaintiff argued that the executor was unwilling to follow the will’s terms because he was also a beneficiary who was contesting the terms of the will.
The court found that there was a patent conflict of interest between the duties of an executor and the executor’s personal interest in the outcome of the estoppel proceeding, but that this conflict did not warrant his removal. As executor (and defender of the estate), the son was required to assess the validity of his claim against the estate, and he had a duty to halt distribution based on the fact that there was a viable claim against the estate.
Some of the deciding factors in this matter were:
- The administration of the estate was almost finished and there would be a delay if the executor was removed;
- The executor was a practising lawyer and was able to make a judgment as to the viability of his claim although he was not entitled to rely solely on his own judgement;
- There was no prejudice to the plaintiff, as her bequest was preserved until the court finalised its decision.
A will-maker who is concerned about their choice of executor should consider naming a second person in their will to act as executor. Having more than one executor named reduces the pressure on any one person, and ensures that each executor can oversee the other executors.
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