Scottish flat sold to self-dealing executor with water damage and insurance claim payout

law4learning

A week before he dies A suffers water damage to the bathroom roof in his flat in Scotland. Thanks to the Xmas period intervening and that it’s an Artex ceiling the source of the leak couldn't be established and repaired by the insurance company for several weeks. In the meantime the water was wending its way across the ceilings, down the walls and into the floor, making the damage considerably worse.

In his will A has appointed his three children B,C and D as executors. B lives five minutes away from A’s flat and basically has been dealing with the estate, including the insurance claim, on her own. C and D live far away. B, C and D are also beneficiaries, along with B’s three children and seven others. All are residual beneficiaries receiving a percentage of the estate. B and her three children have obtained written agreement from the other beneficiaries that they will buy the flat but have not yet paid the necessary amount into the estate bank account. 

Ten months after A’s death his insurance company, via its loss adjuster, has now offered a five-figure initial sum to settle the majority of the water damage claim. An uncosted schedule of works has been provided. The loss adjuster wants all three executors to give their agreement to  accepting this offer. Once the agreed sum goes into the estate bank account B would then pay in the missing amount for buying the flat, have the title deeds changed, pay all the beneficiaries and arrange for repairs to the flat herself. She would keep the estate bank account open to receive money from the insurance company for the rest of the claim and any VAT she incurs. It seems the insurance company doesn’t know B is buying the flat.

Although a bit unusual, is there anything going on here that could potentially cause someone problems? Will C and D have to sign anything for the title deeds to be changed? Can they regard themselves as being finished with the executorship once all beneficiaries are paid, that then the estate has been “wound up”?

buddy9

Assuming that Confirmation has been issued for the co-executors. Assuming that the house is described in the inventory as damaged and valued in its damaged condition. Assuming that the insurance claim amount (or estimate) is listed in the inventory as a moveable asset of the estate.

For conveyancing, I would anticipate that all co-executors may require to sign. Conveyancer will confirm.

If there is no surviving spouse, and the legacy coming to each of B, C and D is valued greater than ⅙ of the net moveable estate, then legal rights consideration will not be relevant. If the legacy is less than this, there is a  need to address legal rights (legitim) claims or discharge.

Might not be as simple as B depositing money into bank account. Conveyancer may have AML (anti money laundering) compliance requirements given the circumstances.