Prevention is better than cure - when should you consider appointing an independent administrator?
The appointment of an independent administrator can be a valuable tool to diffuse conflict and enable progress in a deadlocked estate, but in practice, it is often overlooked or considered a last resort.
An estate need not be on the brink of an application to remove the existing executor(s) before an independent administrator can be seriously considered; their early involvement can relieve underlying tensions and avoid the unnecessary escalation of issues within an estate.
There are some common early indicators of when an independent administrator should be considered:
- Disputed lifetime transfers - in this scenario, an executor may have a vested interest in the outcome, either because they were party to the transfer or because they are a beneficiary of the estate. A neutral administrator can investigate the transfers and make an impartial decision based on the evidence.
- Occupation of estate property - the vast majority of estates will include at least one property and difficulties can arise for executors when that property is occupied either by beneficiaries or third parties. There may be complex legal issues to consider such as the nature and terms of the occupation, minimum notice periods and whether the estate has a claim for mesne profits. If vacant possession of the property is required to enable a sale, the executor may need to work collaboratively with the occupier to achieve this and potentially bring court proceedings if this is unsuccessful. Appointing an independent person with the knowledge and experience to navigate this can save an estate vast amounts of time and money.
- Disputed wills - in the event of a potential challenge to the validity of the will or claim under the Inheritance (Provision for Family and Dependants) Act 1975, an executor who is also a beneficiary is required to wear 'multiple hats' and may have, or be perceived as having, a conflict of interest. The appointment of an independent administrator can place all the beneficiaries on an equal footing and remove any grey area in the overlap between their roles.
- Executor conflict - it is all too common for a will to name multiple executors, without the testator having given much thought to whether the executors can work effectively together. For example, siblings who already have a strained relationship are unlikely to work in harmony as co-executors. The pressure of the role and fulfilling what they consider to be their parent's wishes can often lead to indecision, disagreement and deadlock.
- Intestacy - where there is no will specifically naming an executor, it may not be clear amongst those eligible who should step up to the role and those who are eligible may be reluctant to volunteer for any number of reasons. The role of an executor is an onerous one and whilst already grieving the loss of a loved one, this can understandably be too much of a strain for some.
There are of course many more circumstances in which an independent administrator would be appropriate, such as estates with complex assets, assets in other jurisdictions, and insolvent estates. An administrator can be parachuted into almost any estate where the administration is not progressing as efficiently as it could be.
Will an independent administrator increase costs?
Contrary to expectation, the appointment of an independent administrator does not necessarily add additional cost to an estate administration.
The right administrator should have the knowledge and expertise to cut through the issues and efficiently navigate the administration of the estate. A timely appointment can often prevent unnecessary legal costs from being incurred by dealing with potentially contentious issues before they arise and proficiently managing the different personalities of the parties involved, avoiding costly litigation.
What are the next steps to appoint an independent administrator?
It is sensible to obtain information from at least three potential administrators for the outgoing executors to consider.
For the prospective administrator to confirm whether they would be a suitable appointment and to provide an indication of their costs, they are likely to require the following initial information:
- The names and addresses of all parties to ensure that no conflicts exist
- A summary of the assets and liabilities of the estate
- An indication of the liquidity of the estate and, where there is little or no liquidity, if any proposals have been made as to how the estate will generate funds
- Whether any steps have been taken in the administration to date and whether a grant has been obtained.
Where a grant has not been obtained and the outgoing executors consent to the administrator's appointment, it is usual to proceed with an application under section 116 of the Senior Courts Act 1981. Where a grant has already been obtained, removal proceedings are necessary under section 50 of the Administration of Justice Act 1985. A section 50 application can be made by consent, avoiding the need for a contested hearing.
How can we help?
Partners Michelle Rose and Fiona Lawrence have a national reputation for being appointed as independent administrators in complex, high-value deadlocked estates. They are supported by a dedicated team, headed up by Sally Rushton and Laura Burrows, who are experienced in dealing with this work and who specialise in both estate administration and contentious probate matters, enabling them to efficiently navigate estates through any obstacles.
Our wider team of specialist Private Client lawyers are experienced in all types of complex estate matters, including international assets, farming land and partnerships, company directorships and shareholdings, ongoing litigation and insolvent estates requiring the abatement of legacies.