Executor Duty conflicts - 2 Executors who are also main Beneficiaries

GTMenorcaFan

By duty I am fumbling for correct words, but I understand that an Executor has duties some of which appear contradictory: Scenario - a mortgage free property that is main part of Estate but nothing in will to say how any of the estate was to be shared other than 50/50.  Property was occupied by deceased and 2nd Exec/beneficiary  for several years.  Exec 1 wishes under their 'duties'  to Maximise Estate so wants an early sale ( as belief Market is strong ). The live in 2nd Exec/beneficiary  has additional worries, also finding a suitable place to live affordable on any sale share ( there are so few available? )  . Buyout offered but Exec 1 thinks is too low and wants to maximise claiming it is their 'duty', hence forcing as sale as 'duty'.  How ever my understanding of Executors Duty is broad namely  to do things in the best interests of ALL the will beneficiaries. There is a conflict?

Ps Does an Executors's duty ever end after final distribution of UK Estate assets? What if there is a long running legal process that affects another small estate asset that is in France.

naedanger

In your scenario both executors have conflicts since they are both acting as executor and beneficiary, and as beneficiaries they both have a personal interest in the outcome of any decision. Such conflicts are common and there is nothing wrong with them provided they don't put their own personal interests ahead of their other responsibilities.

I think what executor 1 is saying is that the best way of ensuring the division of the property is fair to both parties is to sell it on the open market and divide the proceeds. The beneficiary who wishes to buy out the other beneficiary's share can still do so. They just need to pay the fair price i.e. the market price by buying the property on the open market.

p00hsticks

I don't think there's necessarily a conflict - it's usually sensible for the executors to also be the beneficiaries, partly because they'll be looking to  maximise their ineritance, and also because (IMHO) it's a bit rude to ask a (non-professional) person to take on the sometimes onerous role of executor without them having actually benefitting from the will. Having more than one executor, whether beneficiaries or not, always has the potential to lead to diagreements about what is the best thing to do, especially if it involves timing the property market. The situation you describe - where one beneficiary is already living in a property where the estate is split between more than one person - seems from rading these boards to be one of the most problematical.  Some possible options are;

1) If the estate is large enough, it could be split to give one person the property and the other estate assets of equal value.

2) giving the occupant of the property the opportunity to raise a mortgage to buy out the second beneficiary.

3) Putting the house on the market and splitting the proceeds.

As far as when you can achieve the latter - there is the concept of an 'executors year' which suggests that the executor can take up to a year to sort out the estate. If someone was living in the property at the time of death, I'd suggest that - at least morally -  it's good practise to allow them at least a few months to find somewhere else to live, especially if they have been there a long time and bearing in mind that they will be grieving.

Whatever solution is decided on, there needs to be an accurate valuation of the property undertaken for probate and other purposes, and I'd suggest that the expenses relating to the property (insurance, council tax, utilities etc), should be being paid for by the occupant rather than the estate. You could also consider whether it is appropriate for the occupant to be paying rent to the estate.

Keep_pedalling

Any buy out should be based on market value, but your belief that you would maximise the amount by a quick sale just that a belief based on a guess. The reality is that you are not going to get a quick sale on the open as the property is going through probate and it is occupied. You will definitely miss out on the stamp duty holiday.

The one way you will achieve a quick sale is through a buy out. This should be based on a professional, paid for valuation  ( which will be required for IHT purposes anyway). As an executor It does not really matter what price you agree for the buy out as the only beneficiary it effects is you, so if  for example you agreed to let the other beneficiary buy your share for 5-10% under market value that would be fine.

Mojisola

GTMenorcaFan said:

How ever my understanding of Executors Duty is broad namely  to do things in the best interests of ALL the will beneficiaries. There is a conflict?

Your duties as executor can be balanced by what all the beneficiaries are happy with.

If you want to protect any possible claim in the future, the beneficiaries could write out and sign a letter stating that they are in agreement with the chosen route.

I had an situation like this - an elderly relative died and left his estate to his siblings but he had made clear several times to the beneficiaries that he wanted his executor to offer his house at a reduced price to a neighbour's daughter as a thank you for all the support that family had given him over the years.  All the beneficiaries were happy to let this go ahead.

As the estate you are dealing with is split 50/50, another option is for one beneficiary to have the house and the other all the other assets, if they are a match in value - a neighbour who had lived with his mother did this so that he could take ownership of the house.

Marcon

GTMenorcaFan said:

Ps Does an Executors's duty ever end after final distribution of UK Estate assets? What if there is a long running legal process that affects another small estate asset that is in France.

What exactly is the asset? If may be that it isn't covered under UK law and the deceased should have made a (second) will under French law in relation to assets situated there.

getmore4less

Buyout offered but Exec 1 thinks is too low
How far apart.
Lot less work with a buyout as long as the person can raise any funds needed
A good test is would exec1 one  pay the other the equivalent and take on all the work/risk/cost on open market.

GTMenorcaFan

Marcon said:

GTMenorcaFan said:

Ps Does an Executors's duty ever end after final distribution of UK Estate assets? What if there is a long running legal process that affects another small estate asset that is in France.

What exactly is the asset? If may be that it isn't covered under UK law and the deceased should have made a (second) will under French law in relation to assets situated there.

It is a small run down property in northern France - there was a separate will leaving it to the same beneficiaries as the UK will

GTMenorcaFan

naedanger said:

In your scenario both executors have conflicts since they are both acting as executor and beneficiary, and as beneficiaries they both have a personal interest in the outcome of any decision. Such conflicts are common and there is nothing wrong with them provided they don't put their own personal interests ahead of their other responsibilities.

I think what executor 1 is saying is that the best way of ensuring the division of the property is fair to both parties is to sell it on the open market and divide the proceeds. The beneficiary who wishes to buy out the other beneficiary's share can still do so. They just need to pay the fair price i.e. the market price by buying the property on the open market.

Thanks. I guess I am trying to see if ( legally )  the maximise estate ' trumps' the duty to resident exec/beneficiary's  best interests? I can see their argument that  even IF a higher sales price was achieved they (still in a difficult market) have to find a suitable place , plus lots of other upset - I'm  just trying to get an idea on a legal position. I see there are ways to make it  more friendly like 'a chain clause' ie Property is not signed over until another place is secured

Mickey666

GTMenorcaFan said:
 Buyout offered but Exec 1 thinks is too low and wants to maximise claiming it is their 'duty', hence forcing as sale as 'duty'.  

When property is to be shared between two beneficiaries, this sort of disagreement is always likely.  Ben1, who gets the cash, will want the highest possible price for their half, Ben2 will want to pay the lowest possible price for Ben1's half.

Such a situation needed force the house to be sold though, it only needs to be marketed in order to find the 'right' price.  So, market the property for an agreed period of time, inviting final offers by a cut off date.  At that point (assuming there are any offers at all!) the market value of the property is known and Ben2 can decide whether to pay half of that to Ben1 and keep the property or to sell the property and receive half the proceeds.

Ben2 may or may not be able to buy-out their half at the market price but that's their own personal issue and is not really a conflict of the executor's duty.  The executor's will have acted correctly in getting the property valued and giving the beneficiary the choice of what to do.

naedanger

GTMenorcaFan said:

naedanger said:

In your scenario both executors have conflicts since they are both acting as executor and beneficiary, and as beneficiaries they both have a personal interest in the outcome of any decision. Such conflicts are common and there is nothing wrong with them provided they don't put their own personal interests ahead of their other responsibilities.

I think what executor 1 is saying is that the best way of ensuring the division of the property is fair to both parties is to sell it on the open market and divide the proceeds. The beneficiary who wishes to buy out the other beneficiary's share can still do so. They just need to pay the fair price i.e. the market price by buying the property on the open market.

Thanks. I guess I am trying to see if ( legally )  the maximise estate ' trumps' the duty to resident exec/beneficiary's  best interests? I can see their argument that  even IF a higher sales price was achieved they (still in a difficult market) have to find a suitable place , plus lots of other upset - I'm  just trying to get an idea on a legal position. I see there are ways to make it  more friendly like 'a chain clause' ie Property is not signed over until another place is secured

Executor 1 is framing it as their legal duty to maximise the estate. But that isn't the full story in this case. If both beneficiaries were to agree some other option there would be no problem with the executors administering that agreed option.

So if beneficiaries 1 and 2 can agree to another option there is no legal reason to prevent executors 1 and 2 administering it. But if they don't agree then I think executor 1 is correct to say that neither beneficiary could argue with the sale of the property in the open market.

Whereas if the property was sold at a below market value to beneficiary 2 (without beneficiary 1's agreement) then that is much more questionable. I think the executors would be at risk of being successfully sued by beneficiary 1.