What If The Executor Has Lost Capacity?

An executor is someone who is appointed under a person’s will to administer their deceased estate. A person’s executor is usually a family member or friend, but a professional such as a lawyer or accountant can also be appointed as executor. Executors are responsible for faithfully administering the estate in the best interests of the beneficiaries. However, in some situations, the person named as executor may not be suitable to carry out the role of executor. This may be because they have lost or are losing capacity, or because they are overseas or in prison.

What Are The Executor’s Duties?

An executor is responsible for administering the deceased estate. This includes collecting the assets, paying any debts owed by the deceased and selling or distributing the remaining assets in accordance with the provisions of the will.

An executor is required to:

  • Communicate with beneficiaries clearly and promptly 
  • Account for the assets of the estate
  • Discharge any liabilities of the estate
  • Deal with the estate without unreasonable delay
  • Apply for probate if required.

What Is Legal Capacity?

A person has legal capacity if they have the ability to make legal decisions such as entering into a contract, making a will or participating in litigation. A person has legal capacity if they can understand the significance of their actions.

The level of cognition and competence required for one type of legal decision can be different from that for another. A person may have legal capacity to make some types of decisions but not others.

Establishing That An Executor Has Lost Capacity

Loss of capacity can happen gradually or suddenly. An executor who has lost capacity may pose a number of risks to beneficiaries. These include the beneficiaries incurring financial losses because of risk-taking or poor administration by the executor and heightened tension between the beneficiaries as a result of this. If the beneficiaries act promptly upon becoming aware that the executor is losing capacity, these risks can be limited.

When an executor has lost capacity prior to a grant of probate, an application can be made to ‘pass over’ them. If this occurs, the court will appoint another person in the role of executor. If a person has already commenced acting in the role of executor when concerns arise about their capacity, a beneficiary can make an application for them to be removed. 

Passing Over An Executor

If a beneficiary wants to have an executor passed over, they must apply to the Supreme Court and support the application with evidence of why the person should be passed over. If there is more than one executor named in the will, the court may appoint another named executor instead. If there is only one executor named, a beneficiary may apply to the Supreme Court for a Grant of Letters of Administration With the Will Annexed and seek an order appointing them to act as executor instead of the person named in the will.

If the application is based on lack of capacity, medical evidence is likely to be required. The court will then consider what is required for the estate to be administered in the interests of the beneficiaries. If it is satisfied the person should not act as executor, it will pass them over and appoint someone else.

If the court considers that the executor is only temporarily incapacitated, it may order that another person can act as executor while the named executor is incapacitated. If it considers that the incapacity is permanent, it will make a general order allowing another person to take over permanently.

Removing An Executor Who Has Lost Capacity

If a person has commenced acting in the role of executor and subsequently loses capacity or concerns subsequently arise about their capacity, a beneficiary can make an application to the Supreme Court to remove them as executor. As with an application to pass over an executor, evidence will be required as to why they are not suitable to act as executor. If the court is satisfied that they cannot perform the duties of executor, it will appoint another person in the role.

If you require legal advice or representation in any legal matter, please contact Armstrong Legal.

Author

Fernanda Dahlstrom

Fernanda Dahlstrom has a Bachelor of Laws from Latrobe University, a Graduate Diploma in Legal Practice from the College of Law, a Bachelor of Arts from the University of Melbourne and a Master of Arts (Writing and Literature) from Deakin University. Fernanda practised law for eight years, working in criminal defence, child protection and domestic violence law in the Northern Territory. She also practised in family law after moving to Brisbane in 2016.
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