Personal representatives (‘PRs’) of an estate, known as executors or administrators, hold a vital role in managing the affairs of a deceased person's estate. They not only have duties towards the beneficiaries of the estate but they also have obligations towards other parties, such as potential creditors, disappointed beneficiaries and even a trustee in bankruptcy. If the PR does not fulfil their obligations they may find that they are personally liable to these parties. This makes it essential for PRs to take proactive measures to protect themselves. Here, we look at some ways that a PR can effectively safeguard their position and help to ensure a smooth administration process.
Keep detailed records
Accurate and comprehensive record-keeping is crucial for PRs. This includes documenting all financial transactions related to the estate, such as income from estate assets, payments to creditors, and distributions to beneficiaries. It’s also important to maintain records of communications with beneficiaries, which can provide evidence of transparency and good faith. Detailed records can serve as a safeguard, demonstrating that the PR acted responsibly and in accordance with their duties, should any disputes arise.
Communication with beneficiaries
Effective communication is key to reducing misunderstandings and conflicts among beneficiaries. PRs should try to keep beneficiaries informed about the status of the estate, including updates on asset valuations, the probate process, and the expected timelines for distributions of estate funds. Addressing concerns and questions from beneficiaries promptly can help maintain positive relationships and ensure that everyone feels respected and valued throughout the process.
PRs must act in the best interests of the estate and its beneficiaries, avoiding any actions that could be perceived as conflicts of interest. This includes refraining from using estate assets for personal benefit or making decisions that favour one beneficiary over another.
Statutory advertisements
It may be surprising that PRs can be personally liable to a creditor of the estate, even if a debt arises that they did not know about. PRs can protect themselves from this by placing a statutory advertisement in the London Gazette and in a local newspaper. These advertisements ask that creditors come forward. The creditors should be given a minimum of two months to get in contact with the PRs. After the two month period expires the PRs will not be personally liable for claims that they have not been notified of if they distribute the estate after that date. The cost of a statutory advertisement is usually only a few hundred pounds. At Weightmans we strongly recommend all PRs to take this step.
Bankruptcy searches
If a beneficiary is bankrupt their interest in the estate passes to their trustee in bankruptcy to whom any legacies may need to be paid. If a PR distributes to a bankrupt beneficiary, they may be personally liable to the trustee in bankruptcy. A bankruptcy search is a quick and easy way for the PR to protect themselves from distributing to a bankrupt beneficiary.
Searches
In certain cases, it may be appropriate for searches to be carried out, such as missing asset registers and will registers. Whilst there is no legal requirement to register a will, these searches can help with enquiries where there is doubt as to whether a later will exists. Missing asset searches can help to ensure that all assets of the deceased are located. We recommend that these steps are carried out in most estates.
Insurance
To further protect themselves, PRs can also consider obtaining liability insurance in certain circumstances. This type of insurance can cover legal costs and potential damages resulting from claims made against them in their capacity as PR. While it may incur additional costs, the peace of mind it offers can be invaluable, particularly in complex estates or when dealing with missing beneficiaries.
If you have been appointed as the personal representative of a deceased’s estate, our expert probate lawyers can assist you with the process.
