What can an executor do to protect themselves from personal liability?

The role of an executor carries with it responsibilities and obligations, breach of which can lead to personal liability. The primary duty of an executor is to collect all the assets of the estate pay the liabilities of the estate and distribute the assets in accordance with the terms of the will.

Executors, who, through negligence or default, cause loss to an estate will be open to an action by a beneficiary. Such negligence or defaults may consist of:

1. Failures to carry out the provisions of the will
2. Making distributions to persons not named in the will
3. Benefitting personally from the estate
4. Failing to disclose sufficient information regarding the estate

Where executors face difficulties administering the estate of the deceased, they can take a number of steps to protect themselves from personal liability:

1. Negotiate and reach an agreement. For instance, where an executor cannot distribute the estate due to outstanding liabilities of the estate, it may be possible for all the beneficiaries to agree for a retention of an amount to meet that liability before the assets are distributed. An alternative option in these circumstances is to seek indemnities from the beneficiaries or obtain executor’s insurance to cover the eventuality of personal liability.
2. Apply to the court for approval or directions on the administration of the estate. The court will balance the competing claims of the executor for protection from liability, the beneficiaries’ wish to receive their inheritance and the creditors’ rights to what is due to them. When the court gives directions, the executors will be absolved from personal liability as long as they act in accordance with the terms of the court order.

How can a Beddoe Application help an Executor?

In order to avoid personal liability for the legal costs incurred in bringing or defending proceedings without the consent of all the beneficiaries, it may be necessary to bring what is known as a Beddoe application before taking any action. This seeks a costs order from the court directing an executor to bring or defend proceedings and that the costs of these proceedings will be paid out of the estate.

A Beddoe application is not always necessary, such as when a claim is brought by the beneficiary against the executor. In this instance, costs will ordinarily follow the event which means that the unsuccessful party will automatically have to pay the fees of the successful party. In these circumstances, an executor is personally liable for not acting in accordance with their obligations and executors should be made aware that in this instance their personal funds will be at risk.

Contact us

If you need support when resolving a dispute, contact Katie McClean with our Dispute Resolution team, via e. KatieMcClean@rixandkay.co.uk or t. 01273 766 929