Giving it up

When a client considers appointing a professional executor, this presents an appealing opportunity to establish a continuing relationship with the client, with the prospect of financial dividends. However, the client’s best interests must always come first.

A recent case that reached the High Court, involving law firm WAG Davidson & Co, is a reminder that an appointment as a professional executor does not always result in a law firm acting as executor and should be approached with care.

The deceased left her property to her grandson and her remaining estate to her daughter; the net estate was approximately £832,000. WAG Davidson was appointed as executor. The daughter felt the estate was simple enough for her to administer and asked the firm to step down. It refused. In the end, the firm was removed as executor and left with a hefty legal bill.

Who the client appoints as professional executor is also a reflection of the trust the deceased has in the professional executor. Genuine consideration needs be given as to whether a professional executor should act, putting aside any financial gain.

A request to resign

It is not unusual for a professional executor to be asked to renounce their executorship.

As they may also be appointed as a trustee, it must be remembered that the request also extends to retiring as a trustee. This can often be overlooked.

You are not legally obliged to renounce, but you should ensure that you can illustrate that you have taken appropriate steps to show that you have fully considered whether it is appropriate to act.

It is advisable to have procedures in place. Not only will these help you reach a reasoned decision, but they will also demonstrate to the beneficiaries the matter has been properly dealt with.

A thorough consideration of the circumstances is needed: the initial appointment, the reasons why the deceased wanted to appoint a professional, their circumstances at the time the will was written, and the make-up of their estate. For more information, refer to the Law Society’s practice note and the Solicitors Regulation Authority guidance on will drafting and preparation.

Examine the will file and discuss it with the person who drafted the will. A decision should be made at department level, including a senior, experienced member of the firm such as a partner. It would be sensible to involve the risk and compliance team, too; there are wider considerations at play than the potential fees.

The procedures adopted should be clearly explained to those who have requested your retirement. If the decision is not in line with professional guidance, you should ensure that you are prepared to explain your reasons for departing from them.

Best interests

If a professional executor’s appointment is not in the best interests of the estate and there are no solid reasons indicating why they should act as an executor, it would be best to renounce. Any financial advantage in keeping the work must be secondary to the estate’s interests.

The primary duty of a professional executor is to act in the best interests of the estate, which means in the best interests of the beneficiaries. This should be the lens through which you consider whether to act.

While the wishes of the beneficiaries to renounce are relevant, they are not the only factor in determining what is in the estate’s best interests. Other considerations include the following.

1. Why you were appointed

There are genuine reasons why the appointment of a professional executor is desirable, or necessary – for example, if there are potentially problematic beneficiaries (for instance, they are going through a divorce, in a difficult relationship, or suffering from an addiction). The professional executor can act as an experienced, independent decision-maker, well-placed to deal with certain issues effectively.

The primary duty of a professional executor is to act in the best interests of the estate, which means in the best interests of the beneficiaries This should be the lens through which you consider whether to act

It may be the testator did not feel their lay executors would work efficiently and co-operatively together; there might be a concern that one executor may dominate. The appointment of an independent professional may offer comfort, reassurance and a resolution.

The circumstances may have made your appointment appropriate at the time of making the will, but things could have changed. When the client dies, the professional executor may no longer be needed. For example, a domineering or troublesome beneficiary may have died, or an undesirable spouse divorced. You should consider how the testator may have acted in the changed circumstances.

A client may also have wanted a professional to take care of things to minimise upset or stress to their family. They may have known the professional well and trusted them to deal with the estate effectively. This may have given them the security and knowledge that the professional would still be present and able to act many years later. If they had concerns about disagreements over the will, this could also have influenced their choice of executor. These are matters which cannot have changed over time, unless you have been made aware of a change in the testator’s opinions / wishes before their death. They are therefore reasons which would indicate that your appointment as executor remains appropriate.

2. Whether the nature of the estate merits professional involvement

Could the estate be administered by a lay executor, specifically those who have requested your retirement? The constitution and complexity of the estate will be decisive factors; if an estate is small or straightforward, it might not be appropriate for you to insist on acting. This was key in the WAG Davidson case.

It is not uncommon to find that an estate consisting of varied assets, which had the potential to be difficult to deal with when the will was made, has depleted. Had your client anticipated this, they may not have appointed you.

Of course, you should also look at the beneficiaries who have requested your retirement. Are they capable of managing the estate administration? Even a straightforward estate can have unexpected, troublesome issues, particularly for the inexperienced administrator. If you can foresee such problems, your continued involvement may be appropriate and justified.

3. Your likely costs

Would your likely professional costs be proportionate to the size and complexity of the estate? If not, it will be difficult to defend your continued involvement. However, the simple fact of there being costs to your involvement is not enough to justify your renunciation. In many administrations, incurring professional costs will be money well spent if it improves the efficiency of the administration and provides value.

Also, were your fees properly explained to the client at the time you took instructions? Obviously, it is very difficult to give a precise idea of costs which are likely to fall many years ahead, but the Law Society practice note states that at the time a client is considering naming you as executor, you should give an indication of the likely current costs of both carrying out the administration of the estate and acting as executor.

Information about fees should be transparent so the client is aware of potential charges before deciding who to appoint, and you should explain that fees may change in the future. Reference should also have been made to the SRA Transparency Rules 2018 (where appropriate). If there is any doubt about whether or how the likely fees were explained, this could provide a good basis for a beneficiary’s argument that the testator would not have appointed you or your firm had they been aware of the true cost implications. The same is true if your estimate of the likely costs now is a significant increase on the information given to the testator when they made their will.

If a beneficiary informs you that they want to appoint another professional, perhaps one offering a lower fee estimate, or one whom they have an existing relationship with, this should not simply be dismissed.

4. What is best for all beneficiaries

Is renouncing in the best interests of all beneficiaries, not just those who have requested it? If the matter is complicated and the beneficiaries are in dispute, you may need to spend some time discussing the matter with all of them (if possible) and decide on whether to continue acting based on everyone’s opinion.

A professional executor can and generally will renounce if asked to do so but cannot be forced to for no reason. To remove the professional executor would be to disregard the testator’s wishes, and this should certainly not be done without thought. Ultimately, your conclusions to the points above should be considered in light of the simple fact that the testator chose to appoint a professional executor. If the only matter to counter at the point of administration is the wishes of the beneficiaries, that alone may not be sufficient reason to step down. There may be good reasons for you to continue, and you should not succumb to pressure to renounce if you believe it is not in the estate’s best interests.

Pursuing your appointment

If, having carried out a thorough review, you believe it remains appropriate or even desirable for you to act, then you are entitled to do so.

It would be best to explain your reasons clearly to the beneficiaries and to foster an amicable relationship with them to minimise problems later on.

Some beneficiaries may appreciate and accept your reasons, but you should still tread carefully in the ongoing administration and act transparently.

To take on and complete the administration of an estate against the wishes of the beneficiaries would put you in a difficult position and at some point during (or consistently throughout) the administration, there will be negative feelings from beneficiaries

Others will not accept your reasons and may continue to push for your removal. In that case, you could push on with the administration of the estate, but you should balance the wider effects. The WAG Davidson case is a fairly extreme example, but to pursue the administration in the face of clear disapproval from the beneficiaries can harm your relationships with them and result in significant PR damage for your firm. This would not be a decision for the faint-hearted. To take on and complete the administration of an estate against the wishes of the beneficiaries would put you in a difficult position and at some point during (or consistently throughout) the administration, there will be negative feelings from beneficiaries.

This is not an ideal environment to positively progress an administration which could then become an uphill struggle. Even if you obtain a grant of probate, a very dissatisfied and unhappy beneficiary could still apply to the High Court to have you removed as executor at that stage. Such an action would be expensive, and certainly not in the best interests of the estate.

Holding on to your position as executor longer than you should, for whatever reason, should be avoided at all costs.

If you don’t want to act

What happens if there are no appealing reasons for you to act? There might be minimal assets and a danger of no financial reward for your work. You might be aware of trouble brewing between beneficiaries and suspect your involvement could be more trouble than it is worth. If all beneficiaries have consented to you acting, then you should be prepared to do so. Retiring too readily, or at the first sign of trouble, can also lead to criticism. A professional executor is generally appointed for a reason, as discussed above. If you are to extricate yourself from the role, you must do so in the most sensitive way possible.

Conclusion

An appointment as a professional executor is simply a starting point. There are many matters to consider and weigh up before deciding whether it is appropriate for you to act; some of these should be dealt with seriously at the time of instruction to prepare a will. Others are necessarily subject to changes in circumstances between execution and death. It is worth taking the time to create a detailed procedure to guide you in your decision-making at both points.