Settling a claim against the estate

T

Thesearcher

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Hi everyone,

I’m looking for advice on behalf of someone who isn’t online. They are a beneficiary in a will where another beneficiary is making a personal injury claim against the estate. (To clarify, this isn’t a Section 117 claim, which I understand requires unanimous consent to settle.) The personal injury claim has gone through the PIAB, and after some initial contention, all parties eventually agreed to settle. However, one beneficiary has since changed their mind and is effectively holding up the process for everyone else.

Can the executor settle the claim based on the majority’s agreement? My understanding is that the executor is obligated to act in the best interests of the estate, and The Succession Act seems to provide the executor with the authority to settle claims.

I’d really appreciate any insights or references to legal provisions that clarifies this.

Thanks in advance!
 
IANAL

Beneficiaries don't have a say here.

The exec 'stands in the shoes' of the deceased; so any decision the deceased was entitled to make the exec can make.

There's no process for the beneficiaries to approve or veto anything.
 
I would agree that it is up to the executor only to agree the insurance claim. If it was a farm accident or the like there may be farm insurance that would pay out rather than the estate. So that is why that question was asked.

The other beneficiaries have zero say in this. The first job of the executor is to pay the bills, and an insurance payout is a bill. Then what remains after all the bills are paid is what can be given to the beneficiaries according to the terms of the will.
 
The executor will be greatly comforted if the beneficiaries approve the settlement. It makes it much less likely that one of the beneficiaries will later object that the executor failed in their duty, and agreed to a settlement that, in the best interest of the estate, they ought not to have agreed to. Depending obviously on the exact facts, this looks like a very difficult claim for any beneficiary to succeed in, but most executors would rather not have to defend it in the first place, which is why an executor would try to get beneficiary buy-in before agreeing the settlement.

But asking the beneficiaries to agree is a high-risk strategy. If, as here, one beneficiary refuses, what is the executor to do? If he refuses to agree to the settlement, and fights the personal injury claim, and the estate loses, the other beneficiaries might then object that he did not act in the best interests of the estate — he could have settled this on much more favourable terms, and he himself thought that was best to do so, because he recommended the settlement to the beneficiaries, so why did he reject the settlement and fight the action? Was he putting his own interests ahead of the intersets of the estate?

The bottom line here is that it is the executor's job to choose between settling on the terms available or fighting the action. He cannot delegate this choice to the beneficiaries (or anyone else). If he consults the beneficiaries, it must be so that he can take their views into account in making the decision that he has to make. To avoid giving the beneficiaries any misunstanding or any impression that their consent is needed or that they have a veto, he should make the situation clear when he consults them — this settlement is on offer, he would like to know what they think of it before he makes his final decision.

If, as here, the beneficiaries have differing views about the merits of the settlement, then once he has made his decision he should tell all the beneficiaries what he has decided before he implements his decision, and give then an opportunity to challenge if if they want to. Then, if one of them later sues him for maladministration of the estate, he can argue that it is unfair of them to let him implement a decision that they believe to be wrong, distribute the assets on that basis, and only then sue him; they should have sued before the decision was implemented and the assets paid out on foot of it. A court will be very sympathetic to this argument.
 
Thanks, everyone, for your responses—they’ve been very helpful!

From what I gather, it seems that the executor does have the authority to make the decision to settle without needing unanimous agreement from all beneficiaries.

And @TomEdison, if I’m understanding you correctly, the executor can consult with the beneficiaries to gather their views, but ultimately, the decision rests with them. Since they are still liable for maladministration, it’s really about minimizing exposure—if they’ve carefully weighed the options and determined that settling the claim is the lesser of two evils (e.g., avoiding prolonged legal costs or uncertainty in court), they could likely satisfy a court that they acted in the best interests of the estate.

A follow-up question: if the executor decides to settle, can the estate’s solicitor refuse to act on their instructions? Would the solicitor also be exposed to any potential liability, and could that influence their stance on whether or not to proceed?

Thanks again for all the insights—it’s greatly appreciated!
 
The "estate’s solicitor" is the executor's legal representative. He doesn't represent the beneficiaries or anyone else, just the executor(s). Unless there are sound legal or professional reasons for refusing instructions, he is expected to follow instructions from the executor.
 
Thanks, Mathepac. If the legal representative advises against settling due to the possibility of litigation from the objecting beneficiary, but the alternative is a stalemate that could indefinitely delay the estate's administration, or a legal case by the claimant, can the executor still make the call to settle? Essentially, can the executor proceed with a decision they believe to be in the best interest of the estate, even if it goes against what might otherwise be sound legal advice?
 
Thesearcher said:
can the executor proceed with a decision they believe to be in the best interest of the estate, even if it goes against what might otherwise be sound legal advice?
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DannyBoyD said:
Can? - yes
Should? - probably not!
Click to expand...

Must!

The executor's duty is to act in the best interests of the estate. He cannot subordinate the interests of the estate to his own personal interest. Don't take on the job of executor unless you are up for this level of selfless heroism.

But.

Obviously the executor should weigh the advice of the estate solicitor very carefully. If the solicitor is saying "if you do X, one of the beneficiaries is likely to sue; the adminstration of the estate will be tied up for years; and the estate will be depleted by the costs of defending the action", those are all considerations which suggest that it is not in the interests of the estate to do X. Even if, viewed on its own terms, X looks to the executor like the right, just and fair thing to do, the executor should consider all the likely consequences of doing X, and not just the good consequences that he thinks doing X would have.

If you're in a situation where doing X will likely result in one benefiary suing and not doing X will likely result in another beneficiary suing (and you think doing X is the correct thing) then your options are (a) as suggested above, announce that you are going to do X and invite the beneficiary who objects to apply to court to stop you, or (b) apply to court yourself for directions on whether you are to do X or not.
 
TomEdison said:
(a) as suggested above, announce that you are going to do X and invite the beneficiary who objects to apply to court to stop you, or (b) apply to court yourself for directions on whether you are to do X or not.
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Thanks again, TomEdison and DannyBoyD, for all your responses.

@TomEdison On the matter of (a) inviting the beneficiary to take action, I’d like to understand whether their refusal to engage could continue the stalemate. Specifically, if they make an application to the courts, could they use this as a delay tactic? The court process can drag out for years, and this seems like a plausible strategy to stall proceedings.

On the other hand, (b) applying to the courts for direction could add significant costs to the estate and may also face lengthy timeframes, which is another concern.

Given these two scenarios, wouldn’t it make more sense to let them initiate action against the estate (a), particularly because this would require them to pay costs upfront? If they’re serious about pursuing the matter, wouldn’t they need to secure an injunction of some sort—likely in the High Court—which would not only be costly but could also be contested at that stage?

Curious to hear your thoughts!
 
You pays your money and you takes your chances.

Have you spoken to the beneficiary in question? Do you understand what their reasoning is?

Can you navigate / negotiate this without recourse to the courts? The law is a very blunt instrument, yes you'll get an answer in the end, but it costs money and time, is your beneficiary aware of your next course of action?
 
DannyBoyD said:
Have you spoken to the beneficiary in question? Do you understand what their reasoning is?
Click to expand...
Thanks DannyBoyD
It would appear they are refusing to communicate with other beneficiaries and more recently, refusing to engage with their own solicitor. They originally (reluctantly) agreed to it. It appears they have realised their inaction is their action which is a strategy in itself.
Their reasoning is anyones guess but there is an element of mental health issues involved.
 
Thanks @TomEdison @DannyBoyD @mathepac and everyone else.

It's strange that this should happen today as it has been going on for some years - the beneficiary has written to the estate and agreed to the settlement so it looks like this matter is settled.

Thanks all, appreciate all the comments and you all taking the time to answer.
 
Telling them that you propose to accept the settlement and giving them an opportunity to initiate court proceedings to prevent that before you actually do is essentially an invitation to them to put their money where their mouth is. If they are going to go to court over this, you very much want them to do so before you accept the settlement rather than some time after. Putting them on notice that you are going to accept the settlement effectively forces their hand. If they wait until after you accept the settlement and only take proceedings them, you will point out to the court that they didn't act to prevent acceptance of the settlement when they still could, and it would be most unfair if they could sit back, allow you to accept the settlement, and only sue afterwards. They'll be aware that you could advance this argument, and it would probably be well-recieved. Therefore, they will understand, it's time for them to put up or shut up.

If they do launch proceedings — yes, that will delay the administration of the estate and will run up costs for the estate. But they have a right to launch proceedings; there is nothing you can do that prevent this ever coming to court, and if it ever comes to court then cost and delay will result. So the aim here would be to flush out any court proceedings — to force them, if they are going to take court proceedings at all, to take them now.
 
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