Problems with executors

It is usually safest to appoint more than one executor, except in the simplest of cases.

Where no executor is appointed in a will, the court may grant the administration of the estate to a person entitled to the residue of the estate or (if appropriate) some other share of the estate. If the beneficiaries so request, the Public Trustee or a private trustee company may be appointed by the court to administer the estate. If there is no person in this State over the age of eighteen years willing or able to act as executor, the court may order that the administration be granted to the Public Trustee.

A person appointed as executor does not have to accept that responsibility [ Administration and Probate Act 1919 (SA) s 36]. If a person renounces (refuses) such an appointment, the other executor named in the will becomes the sole executor. If no other executor is named in the will, the procedure above applies. This sometimes happens where the will is old. If there is no living executor, the procedure outlined above following applies.

If a sole executor dies after the testator and after probate is obtained but before administration is complete, the executor of the deceased executor's estate becomes executor of the deceased's estate. The issues raised by the death of an executor are quite complex depending on the stage that matters have reached and legal advice should be sought.

Where the sole executor is under 18 years, the court appoints the child's guardian as executor until the child reaches 18 years of age.

Where the executor has breached his/her duties, an action can be taken against them in the Supreme Court. An executor’s duties are to preserve, protect and administer the estate diligently so where an estate has suffered waste as a result of deliberate or negligent actions on the part executor this will amount to a breach. Any action taken will be against the executor personally, not the estate. It will not be a defence that the estate has been fully administered and there are no assets to meet the claim. If found liable, the executor must make good any loss to the estate.

There are several types of breach and these can often overlap. The main categories of action against an executor are:

  • Misappropriation
  • Maladministration
  • Breach of trust

Misappropriation occurs when an executor uses an estate’s assets to pay his/her personal liabilities or fraudulently disposes of them for a profit.

Where assets have been dealt with in a manner other than provided in the will or by law, an action for maladministration may sought. Examples of maladaministration include a failure to pay and discharge debts; selling property undervalue and using assets for personal use. It is not a defence to an action for maladministration that the executor acted in good faith.

A breach of an executor’s duties can also result in an action for breach of trust. For example, an executor who fails to demand and enforce payment of a debt owed to an estate will be in breach of his/her duty of care. If a loss is suffered by the estate as a result of the failure to enforce the debt the executor will be liable to repay the loss. Further examples of breach of trust include:

  • Failure to observe the provisions or directions in a will;
  • Where an executor makes a profit whilst acting in their capacity as executor;
  • The making of unauthorised investments resulting in a loss;
  • Use of estate to pay for executor’s personal debt.

This area of law is extremely complex so legal advice should be sought if considering any application to the Supreme Court.

Problems with executors  :  Last Revised: Mon Jul 22nd 2013
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