Jodie Walmsley, Litigation Executive in Coodes Solicitors’ Personal Disputes team, explains how the executor’s year can impact on inheritance claims.
If you are due to inherit, it can be frustrating if you feel the estate is not being administered as quickly as it could. Clients often ask us to support them within the first few weeks or months of a death because they are unhappy about how the executors are administering the estate. However, the executors are under no obligation to distribute the estate within the first 12 months from the date of death. This is known as the executor’s year.
How does the executor’s year work?
The executors have a number of duties to both creditors and beneficiaries during the administration of the deceased’s estate.
Starting from the date of death, the executors have 12 months before they have to start distributing the estate. This allows time to gather information on the estate and check for potential claims. The executors have no obligation to distribute the estate before the end of the year. Therefore, anyone who believes they have a claim to the estate should make the executors of the estate aware of any potential claim as soon as possible. They could also consider lodging a caveat to protect their position in the first instance.
Even after the end of the executor’s year there may be good reason for delays to the distribution of the estate. For example, the executors may not yet have sold the deceased’s property. Probate can be highly complex, particularly if there are multiple beneficiaries, and it can take many months or even years to distribute an estate, especially in the cases where an estate is being contested.
What about dependents?
Dependents under the age of 18, who were wholly reliant on the deceased as sole carer, will need to quickly be provided for, which can accelerate the timescale. Therefore, there is an exception to the executor’s year, under laws for provision for family and dependants under the Inheritance (Provision for Family and Dependents) Act 1975.
This means that, if a sole carer has died, their children should receive their inheritance, or in some cases an interim payment, within six months of the grant or probate being issued. This sometimes falls within the executor’s year. In this situation, the executors will be expected to distribute the estate before the end of the executor’s year to ensure that the dependant is provided for.
What if beneficiaries feel there is an unreasonable delay?
Executors must not unreasonably delay distributing the estate for their own gain or any other party. However, even after the executor’s year, the court will not order a distribution of the estate if the executors can show there is good reason to wait.
There are many reasons why an estate may take time to administer, particularly if there are a number of beneficiaries and properties to sell. One acceptable reason to delay distributing the estate is to guard against the possibility of a claim under the Inheritance Act 1975. In other words, executors should not be rushed into distributing funds if they believe there may be others with a claim to the estate who need to be provided for.
As a general rule, any claim under the Inheritance Act 1975 should be made within six months from the issue of the grant of probate. However, there are a number of exceptions to this rule, including the validity of the Will in question, undue influence, coercion and capacity of the testator, to name but a few.
In these cases, administration may also be delayed if someone has lodged a caveat preventing a grant of probate being issued because they have doubts about the validity of the Will.
What can beneficiaries and executors do after the end of the executor’s year?
If, after the 12 months is up, an executor or a beneficiary believes the administration is being delayed or the executor is failing in his or her duties, they can firstly write to the executor asking for an update on the administration. As a beneficiary, you can ask to be provided with an account of all estate activities. If an account is not forthcoming, you can make an application to the court for a court order that the executor produces an inventory concerning the estate.
In some circumstances, you can make an application to the Court to remove the executor, should they not be complying with their obligations. The courts will not take this decision lightly and there must be evidence of them failing to perform their duties correctly. The executor may be ordered to pay the costs of any such application, putting them at further personal liability.
What happens if the beneficiaries put pressure on during the executor’s year?
It is important for executors not to be pressurised to rush the estate administration. The executor’s year is in place to provide sufficient time for the important and time-consuming process of gathering information and dealing with enquiries. That being said, beneficiaries also have the right to be kept updated in relation to the administration. Therefore, if information is not forthcoming from the executor, the beneficiaries should seek legal advice even if it is within the executor’s year.
If an executor is pressurised into distributing funds to beneficiaries before the end of the executor’s year, mistakes could be made. The executor would then be held personally liable for these errors. In a recent case, an executor was ordered to pay HMRC more than £14,000 and a penalty of £5,000 to cover the income tax of the deceased’s income. This is because he had undervalued the deceased’s income and the error only came to light after he had distributed the funds. In this case, the executors had chosen not to instruct professionals to help them administer the estate and distributed the estate before receiving a clearance letter from HMRC.
It is important to know that an executor can be held personally liable for the debts of the deceased up to the value of the estate, even if they did not know a debt existed. If they distribute the estate to beneficiaries and then discover that the estate owes money, they could face a claim from a creditor.
Remember, an executor has the legal authority to administer an estate and is ultimately responsible for any mistakes made. They can be held personally financially liable for any breaches of duty. That means executors should take professional advice and ensure they take the time they need to in administer the estate. The executor’s year is there for good reason. It allows time for the executors to thoroughly work through the deceased’s wishes and deal with any unexpected claims or enquiries before distributing the funds.
For further information or advice on these issues please contact Jodie Walmsley in Coodes Solicitors’ Personal Disputes team on 01736 352233 or email@example.com.