27/01/2016

One of our recent files shows how important it is to choose the right executor to look after your estate and the difficulties that your beneficiaries will face if the executor fails in their duty.

Doris was now pretty much alone.  She always knew that with Fred more than 20 years older than her, she could face her old age alone.  Now Fred had passed and her assumption was proven correct.  But she didn’t realise just how alone she’d be.

Doris was a Chinese national who had come to Australia only 15 years ago and quickly met and married Fred, a widower.  Her English was quite limited but she got by with help from Fred and some of the ladies at their church.  Fred looked after them both but never really discussed finances with her.  Fred’s two adult children were never completely happy about their relationship and kept their distance.

Fred was not a wealthy man – a house with a mortgage, some super and that was it.  He made a Will at his local solicitors and gave everything to Doris because his adult children didn’t need the extra money. Because his children didn’t have much of a relationship with Doris, Fred appointed his solicitors as executors.

After he passed, those solicitors took over two years to administer an estate that should have been wrapped up in six months.  Their delay caused the bank to foreclose on the mortgage because Doris had no way to pay the interest on the loan.

As a result of the foreclosure, Doris was ejected from the property and would have ended up homeless but for the charity of her church ladies who were able to find her a series of spare rooms to live in.

With no job, poor English, and of an age where most people find it hard to get work, Doris had only the dole and the charity of others keeping her going.

By the time she came to us she had seen three other firms, all of whom had been unable to get the executors to fulfil their duty in a timely fashion.  Why?  Who knows.  Maybe they were dragging it out to earn more fees.  Maybe they were just very busy with more interesting work.  What we found strange was their complete disinterest and lack of humanity in the face of Doris’s lack of resources – a problem they could have fixed if they had just shown some diligence in administering the estate.

Why were we able to get them to finalise the estate?  Probably only by being persistent.  We daren’t threaten them with court proceedings as they may have gone even slower and, believing that their costs would be paid out of the estate, may even have welcomed a claim against them.  

And of course any court proceedings would have delayed the administration of the estate by years, by which time Doris may well have been completely destitute.  All we could do was try to remain courteous while at the same time quietly persisting with our pressure for them to complete their role.

Case law says that the Executors will not be indemnified out of the estate if they do not act reasonably.  These solicitors did not act reasonably and almost certainly they would have had to pay their own legal costs had we commenced proceedings.  But our fees would have reduced Doris’s payment from a relatively small estate and then there was that fear of further delays.

Although this is an extreme example it shows what can happen when a testator chooses an inappropriate executor. 

For further information regarding our Estate Planning services, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.