When estates stall: what is the role of independent administration

It is becoming increasingly common for those involved in dealing with an estate to find themselves in a position where they cannot move forward with estate administration. This can be for a wide variety of reasons, which are often incredibly complex and contentious.

What is the issue for STEP members?

It is becoming increasingly common for those involved in dealing with an estate to find themselves in a position where they cannot move forward with estate administration. This can be for a wide variety of reasons, which are often incredibly complex and contentious.

What does it mean for STEP members?

It is in the best interests of STEP members supporting clients through the probate process and of the clients themselves, for estates to be administered in a timely and cost effective way. Where an estate has stalled, this can lead to extremely long delays and extra costs. In addition, for contentious cases, it is usually far preferable to solve the issue without the expense of going to court. Independent Administration can play a key role in solving these issues.

What can I take away?

STEP members can gain an understanding of the Independent Administration process, when an Independent Administrator can be appointed and how this can help them to deliver better outcomes for their clients, as well as use their own time in the most effective way.

Independent administration is a specialist service solicitors and families can use when there are uncooperative executors, differences of opinion or contested Wills, which in turn create a delay in the administration of a deceased’s estate.

This service is best used in an estate where; the parties concerned just do not agree or are contesting the Will, where the executors have either not acted at all or acted improperly and confidence has been lost.  When there are estate assets at risk which need to be preserved and bills that still need to be paid.  Independent Administrators act impartially so that payments and administration are carried out effectively for the preservation of the estate assets. By using a service like this the people dealing with the dispute can focus on reaching an outcome without losing elements of the estate.

If an estate is likely to become embroiled in a dispute it is advisable to seek the appointment of an Independent Administrator.

An Independent Administrator is a person approved by the court to replace those appointed in the Will or under the Rules of Intestacy to administer an estate.

The Independent Administrator will be unconnected to the estate and parties involved and will have no interest in the assets to be dealt with, so they will be truly independent.

Where a grant has already been made, it is also possible to remove executors if it is clear that they are incapable of dealing with the estate and for the appointment of an Independent Administrator instead.

The Independent Administrator will have the authority and autonomy to push forward the estate. Typically, an Independent Administrator will be a specialist probate lawyer with the               capability to navigate and handle all estate matters and apply an even-handed approach to minimise arrears of potential risk and conflict.

When is it appropriate to appoint an Independent Administrator?

When there is a Will

• The executor is considered unfit or inappropriate to act, or the estate may be at risk
• for example, because of financial dealings or bankruptcy or mental ill health.
• The executors are in dispute with one another, or have a conflict of interest.
• The executor has renounced probate and there is no one else who is able and willing to act.
• The executor cannot be traced.
• The beneficiaries under a Will are unhappy with the executors.

When there is no Will 

An Independent Administrator may be needed where there are a number of beneficiaries equally entitled to a grant and agreement cannot be reconciled as to who will act, for example, if there is distrust between them.

The tipping point for an Independent Administrator to be appointed

Tipping points tend to either occur at the outset of the estate administration or at the point where either the executor and/or the beneficiaries have fallen out.

At the outset 

In some cases at the outset the executor can be conflicted, for example, if an executor has a potential claim against the estate, which brings them into direct conflict with the beneficiaries under the estate.

An illustration of this would be where, for example, the deceased died intestate survived by her partner and their daughter, who is a minor. Under the intestacy rules the daughter inherits her mother’s entire estate when she attains the age of 18.  The partner, as the child’s father, could be one of those entitled to take out a grant for the use and benefit of the child, however, the partner’s own claims against the estate may bring him into conflict with his daughter and on this basis appointment of an Independent Administrator through, for example, a firm’s trust corporation would ensure impartiality and clear separation of interests.

During the probate process

In other cases, it is common for frustrated beneficiaries to call for an Independent Administrator to be appointed where the executor has not progressed the estate administration in a timely fashion or suspicions have been raised as to the conduct of the executor in relation to the  valuation or disposal  of assets and accountability of the estate funds, or simply taking a high handed approach to estate matters resulting in a breakdown in the relationship between the executor and beneficiaries.

The recent case of UGOLOR & UGOLOR (2021) EWHC 686 Ch – Replacement of Incompetent Executor with Independent Administrator, is a good example of the important role Independent Administration can play during the probate process, especially when it comes to disputes.

The case arose from a dispute between four siblings over the estate of their late mother. The Claimants were contesting the validity of the deceased’s Will and in the interim requested the High Court make a decision as to who should administer the estate, as they believed the Defendant in the case should not be allowed to continue as executor.

In his judgement, Peter Knox Q.C said: “First, and as a general point, on the evidence before me it is clear that the Defendant is not an appropriate person to be administering the estate pending resolution of the Claimant’s claim. Therefore, he should in my view be replaced on any footing by a more responsible administrator pursuant to the court’s jurisdiction under s. 117(1) of the Senior Courts Act 1981.

“It seems to me that the same principles must apply as they do under s.50 of the Administration of Justice Act 1985, which gives the High Court power to appoint a substitute or to remove a personal representative. That is to say, as put by Chief Master Marsh in paragraph 18 of Schumacher v. Clarke [2019] EWHC 1031, the core concern of the court is what is in the best interests of the beneficiaries looking at their interests as a whole; and if there is a good arguable case for removing a person who claims to act as executor, then the court has a power to do so. So here, in particular given that there is a live dispute as to who the beneficiaries of the deceased’s estate should be, I have such a discretion to exercise to see that their best interests are served, whoever they may turn out to be on further investigation.”

Best practice in Independent Administration

An Independent Administrator has a duty of care to act in good faith, fairly and honourably. In this role an Independent Administrator must also be and be seen to be independent and impartial in the management of the estate.  An Independent Administrator will be experienced and will be able to take over the estate administration and carry out the work quickly and efficiently.

Illustrations of probate cases dealt with using an Independent Administrator

After the death of their parents, four siblings found themselves unable to agree on how to progress their parents’ estate.  The siblings were all equally entitled to deal with the estate but could not see eye to eye, so nothing was getting done.  The longer this went on, the greater the estate’s financial detriment; liabilities were not being met, rent was going uncollected and penalties and interest were growing against unpaid taxes.

Following several years of stalled progress and arguing through their own solicitors, the siblings agreed to appoint an Independent Administrator.  This relieved them of all pressure and responsibility, and their parent’s estate was collected in and distributed in accordance with their wishes.

Upon being instructed, estate information was gathered from each sibling.  Quickly all of the estate’s assets, sources of income and liabilities were identified.  Arrangements put in place for all previously uncollected and future income to be paid and we started working with the estate’s creditors to minimise any further loss to the estate. Within 12 months of being instructed the estate was distributed to the siblings in accordance with their parents’ wishes, allowing them to move on with their lives.

Instructed by the claimant, being one of two sisters in respect of their late father’s estate who had realised that her sister, the defendant, had plundered their father’s modest estate. A Trust Corporation was appointed as an Independent Administrator to administer the estate. The defendant, had proved her father’s Will and had realised and spent all of the money in the deceased’s accounts. That Will was ultimately declared invalid by the Court and an earlier Will was ordered to be admitted to Probate. The correct Will was proved. This administration process was made difficult and protracted by the two warring sisters together with spells of non-communication. It was further hampered by some of the beneficiaries spending time at her majesty’s pleasure. Despite this, by careful management the estate was brought to a successful conclusion and the assets were distributed to the beneficiaries.

The above are just two examples of where appointing an Independent Administrator can help with the successful administration of even the most complex estates. As the number of estates which stall – for a wide variety of reasons – continues to grow, it would be wise for all practitioners who support clients in this area to further familiarise themselves with Independent Administration and how appointing an Independent Administrator may be able to assist them in the future.

This article first appeared in STEP Journal Issue 2, 2022