The High Court has awarded properties estimated to be worth up to £5 million to the wife of a deceased London property investor and restaurateur after declarations of trust signed before his death were found to have no legal or equitable effect.
The judgment regarding the case of Teixeira v Moaven and Ors is particularly important for contentious probate practitioners and professional independent administrators appointed into highly contested estates.
John Breeze, Director and Head of Wills, Trust and Inheritance Disputes at Wake Smith Solicitors looks at the landmark case, which provides some welcome reassurance to executors who may find themselves stuck in the middle of family disputes about the ownership of estate assets.
John said: “The general rule for executors is they must remain neutral in their dealings, or else risk being punished in costs.
“It is therefore understandable that executors, when faced with conflicting demands from estate beneficiaries, may feel the need to err on the side of caution.”
In this case, there were two professional executors, a solicitor and an accountant, appointed to act jointly with a family member of the deceased.
The executors took the view that several properties in dispute should form part of the deceased’s estate, and took an active role in litigation to contest the validity of “sham” Declarations of Trust which appeared to place the properties outside of the estate. The action was successful and the properties were recovered for the estate.
John added: “At trial the opposing party tried to argue that the executors should not be allowed to take an active role, due to their duty of neutrality, but the Court disagreed.
“Instead, the Judge held that: “the personal representatives' fundamental duty was to get in and protect the estate” and “if, as here, the personal representatives took the view that the proper protection of the estate required them to take an active stance, then, they were perfectly entitled to take that position”
“The Court’s decision is helpful, especially for professional executors who are often appointed by their client Wills, or by the Court, to ensure that everything is dealt with fearlessly and correctly. Being neutral should not equate to being passive and allowing the estate to suffer loss or delay.
“But the Court’s decision is not a free pass to executors to side with one set of beneficiaries over another. It was said in cases where beneficiaries are already taking action to resolve the issue “it would be appropriate for the personal representatives to, simply, stand by and await the outcome.” In that context, the judge added “an unnecessary intervention could sound in costs.”
Wake Smith Solicitors are specialists in the administration of estates and in contentious probate, and are regularly appointed as executors of client Wills and, by the Court, to act as independent administrators of complex and contested estates.
When appropriate, Wake Smith can, and will, take action through the Courts to resolve issues that cannot be settled by agreement.
If you have a dispute or concerns about the administration of an estate, contact John Breeze directly at [email protected], or call us on 0114 266 6660. Alternatively, you can submit an online contact form here.