Settling a claim against the estate

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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!
 
Thesearcher said:
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?
Click to expand...
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.
 
mathepac said:
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.
Click to expand...
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?
 
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