Executors duty to provide beneficary with accounts when requested

[SilverBirch]

Hello there - this is my first post.

I have read in this forum and on many other legal websites that while an Executor is not obliged to keep beneficiaries informed as to the progress of probate, they do have a duty to provide accounts when asked. Does this apply to interim accounts during the progress of probate, especially after the IHT400 has been filed? Is there an official source that I can be pointed to that specifies that an Executor has duty to provide accounts when asked - I don't want to wait till the final distribution account to find out that there is not much left. Thank you.

[des8]

Re: Executors duty to provide beneficary with accounts when requested

Hi and welcome
The executor only has to provide detailed accounts to residuary beneficiaries when estate is finally settled.

If you think about an executors duties you will realise that it is unreasonable to expect running accounts and estimates of residual benefits.
And in any case, if these accounts were provided the expense would deplete the amount available to distribute, and the executors first duty is to preserve the assets, not spend them on his expenses.

http://www.hmrc.gov.uk/manuals/tsemmanual/tsem6054.htm

[SilverBirch]

Re: Executors duty to provide beneficary with accounts when requested

Thanks for your reply.

Yesterday I was in the Probate Court where I was seeking an Order to force the Executor to provide an interim account of the Administration since he had refused to answer my reasonable requests.

The reason I am keen to see an interim account is that I suspect some incompetence or imprudence on the part of the Executor that is going to cost the estate significant late payment interest and penalties for failing to pay the first installment of inheritance tax on time - hence why I think he has been reluctant to provide any information until the Administration is completed.

If I can show incompetence, then the Executor may be personally responsible for these unwarranted costs. I realise that there may be some extra costs involved in providing an interim account however I did believe that he had a duty to provide information when the beneficiaries requested it at any time.

The Judge agreed, citing a case from 1797 (Myddleton & Rushout) where this right of beneficiaries to request information at any time was established.

The Judge has therefore ordered the Executor to provide this information to me within 28 days and if not, then we are back in Court for him to answer why he has breached a Court Order.

[des8]

Re: Executors duty to provide beneficary with accounts when requested

Thank you for letting us know the outcome.

Your original query was about the requirement of an executor to provide running accounts to residuary beneficiaries
My response would still be to say there is no such requirement, but I would now add "unless so ordered by a court".

The case quoted (as also Phillips v Bignell 1811 & Byrnes v Clarkson) seem to order inventory and accounts after completion of distribution, not running accounts.
The following comment is an extract from an Australian Law Reform Act which seems to agree:
"The English legislation requires that a personal representative shallbe under a duty, but only when required to do so by the court, to exhibit on oath in the court afull inventory of the estate and when so required to render an account of the administration ofthe estate to the court. There are currently no provisions in the English Non-Contentious Probate rules dealing with this matter."

I haven't been able to locate a transcript for these three cases, and comment is based on other commentators.
If anyone can point me in the right direction I'd be grateful!

[stevemLS]

Re: Executors duty to provide beneficary with accounts when requested

This is the full transcript of the Myddleton case:

Prerogative Court, Easter Term, May 12th, 1797.—An executor bound to exhibit an inventory and account, at the suit of a party having an interest in the property for which he is executor.
A citation was taken out by the widow of Richard Myddleton, Esq., of Chirk Castle, against the executors of her husband to produce an inventory; the executors objected to comply with the citation, on the ground that the widow was not so interested as to entitle her to call for an inventory, as by her marriage settlement she had 500l. per annum settled on trustees for her. To this it was replied that there was a covenant that there should be paid at several instalments money to make up 5000l. stock, or, in the event of her surviving her husband, so much as would make up the 5000l. stock.; that nothing as yet had been paid towards making up his sum, consequently the 5000l. stock was due to her, and she was entitled to an inventory.
Sir William Scott for the executors. This application rests on two grounds; first, that an executor is under a general obligation to deliver an inventory without the application of any person. Secondly, that the party in this suit is a creditrix and, therefore, has a specific interest.
As to the first point, it is true the executor engages to furnish an inventory when required by law; but he is not considered as imperiously ob- [245] -liged to deliver it, unless at the instance of a person interested; at least it is not the practice of the Court ex officio to call for one; therefore there has been no failure of duty. Secondly, the parties usually applicants are the next of kin, or creditors who are immediately and directly interested; but here the party states herself to be interested under a marriage settlement by which money was to be paid, partly in the lifetime of the husband, and partly after his death to trustees for her use; thus she is a creditrix only in equity; the legal creditors are the trustees; the widow's interest is merely equitable, and not to be attended to in a mere court of law.

When legacies are in trust it is always held that the trustee, and not the cestui qui trust, must sue. *974

Dr. Nicholl contrà. The Court will call for an inventory on the shewing of any kind of interest. In Sladen v. Salter , Prerog. Mich. Term, 1792, a suit was pending before the Lords of Appeal on a question of joint capture; it was not determined whether Sladen would be entitled to claim any thing from Salter; and, therefore, it was argued that he had no interest to entitle him to call upon Salter's executor for an inventory; but the Court held that where even the party can shew any kind of interest, it will enforce the call for an inventory. That this could be no hardship, for the executor was bound, both by the stat. of H. VIII. and his oath, to do it, though this was not ordinarily and in all cases enforced; the Court held that a probable interest was sufficient, and said that it knew [246] of no case where such an interest had been shewn, and the application had been refused.

The wife has an interest here; a certain sum should be raised for her use; none of that money has been paid; she has an interest to discover the effects; suppose she wanted to institute a suit to compel the trustees to recover, it would be necessary to see all the assets; but she is the person really interested, for the trustees are to pay over to her.

Judgment—Sir W. Wynne . This is a suit brought by the widow against the surviving executor of her husband for an inventory; the executor has appeared under protest, stating a settlement, and that on 2500l. being granted to Mr. Myddleton, 500l. was assigned to trustees to be set apart annually, paying interest to her; and if by this payment at the death of Mr. Myddleton it did not amount to 5000l. stock, his executors were, three months after his death, to pay that sum to trustees for her use. It is stated that no such sum has been paid, so that 5000l. is now due to her from the estate; this is not denied, but it is contended that she is not a legal, but an equitable, creditor, and that therefore she is not entitled to an inventory.

I never heard of this distinction, nor can I see any reason for it; the legal interest cannot be enforced in the Ecclesiastical Court more than the equitable one.

The statute of H. VIII. requires all executors to give an inventory; this is not required of all exe- [247] -cutors in practice, and the Court always enquires into the interest of any party requiring one; but when it sees any kind of interest it enforces that which is by law generally required.
I know of only one case in which it could be refused; i.e. if a creditor had brought a suit in Chancery for a discovery of assets in such a case, the Court has said that the party shall not proceed in both Courts; this is not suggested here. I see no ground for the objection, and I pronounce against the protest, with costs.

The language is a bit old-fashioned and it is an Ecclesiastical Court relying on a long since repealed statute. The rights and duties of PRs are now defined in the 1925 Act which contains no duty to account to the beneficiaries in the manner suggested. The way that I read this judgment is that the PR does have the duty "at the suit" of a beneficiary, meaning as I understand it that the duty arises where the beneficiary has made application to the court, which you did and so the judge ordered. However, that does not alter the fact that there is no general duty to so account as @des8 says.

So, IMHO, both the learned judge and des are correct.

ETA: Crap formatting

[SilverBirch]

Re: Executors duty to provide beneficary with accounts when requested

According to this Canadian website http://www.gilmoreandgilmore.com/are...ecutor-duties/

"Beneficiaries who are entitled to share in the residue of the estate are entitled to require that accounts be provided to them from time to time. These beneficiaries are entitled to look at the source documents in order to verify the information that is contained within the accounting."

According to this UK website: http://cohencramer.co.uk/inheritance...utor-disputes/

"The executors do not have a duty to keep beneficiaries informed about the administration of the estate however it is good practice to. They do however have a duty to provide a beneficiary with estate accounts when requested."

When I challenged Cohen Cramer for the source of the above statement, they pointed me to the Myddleton & Rushout 1797 case which the Law Society Library helped me locate. Therefore I was not surprised at all when the Judge quoted this same case.

It does seem to me though that an Executor does have a duty to provide the accounts when requested and if they don't then you can go to Court to ask for them to be forced to give them to you. There was no cost for issuing the summons which the Probate Office helped with by providing a template and just a few pounds for swearing an affidavit. Also no court costs as I represented myself and I have to say that I found the court staff and the Judge very helpful to me as I was a lay person and the court was not as intimidating as I expected it might. Costs for the other side were not granted against me but have been left till the end of the case in the event that we go back to court if he doesn't now comply with the order.

[Unregistered]

Re: Executors duty to provide beneficary with accounts when requested

Hi my name is sam I'm in the same position as you I need information from the executors can you tell me the process and how to go about it what forms to fill thank you

[SilverBirch]

Re: Executors duty to provide beneficary with accounts when requested

Hello there. You simply submit a summons application to the Probate Court together with an affidavit which can explain why you are having to take this step. The only cost is about £12 fee for submitting the summons application. I found the London Probate office very helpful - they will email you templates of how to draft your summons and affidavit - you can find their contact details online. Hope this helps.

[Openlaw15]

Re: Executors duty to provide beneficary with accounts when requested

Hello there - this is my first post.

I have read in this forum and on many other legal websites that while an Executor is not obliged to keep beneficiaries informed as to the progress of probate, they do have a duty to provide accounts when asked. Does this apply to interim accounts during the progress of probate, especially after the IHT400 has been filed? Is there an official source that I can be pointed to that specifies that an Executor has duty to provide accounts when asked - I don't want to wait till the final distribution account to find out that there is not much left. Thank you.

Since trustees which includes lawyers acting for beneficiaries have to account to beneficiaries, ie keep them informed of the state of the financial position of the trust, it is very probable that executors (who are merely lay people, ie personal representatives) have to as well especially to know who has what powers and how they're controlling those powers for the benefit of the beneficiaries: Lord Wrenbury in O ’Rourke v Darbishire [1920] AC 581 at paragraph 626; also the Privy Counsel in Schmidt v Rosewood Trust Ltd [2003] UKPC 26; [2003] 2 AC 709; and in Breakspear v Ackland [2008] EWHC 220 (Chancery); [2009] Ch 32.

To suggest that the executors are not accountable to the beneficiaries to provide documents or financial statements of the estate is absurd: Lord Wrenbury in O' Rourke [1920].

[Unregistered]

Re: Executors duty to provide beneficary with accounts when requested

Hi its sam thank you for your quick reply I live in Birmingham contacting the probate office there I inquired how to go about not very helpful at all they told me they can't give legal advice I said not asking for legal advice I just need the forms got nowhere with them😱

[des8]

Re: Executors duty to provide beneficary with accounts when requested

Since trustees which includes lawyers acting for beneficiaries have to account to beneficiaries, ie keep them informed of the state of the financial position of the trust, it is very probable that executors (who are merely lay people, ie personal representatives) have to as well especially to know who has what powers and how they're controlling those powers for the benefit of the beneficiaries: Lord Wrenbury in O ’Rourke v Darbishire [1920] AC 581 at paragraph 626; also the Privy Counsel in Schmidt v Rosewood Trust Ltd [2003] UKPC 26; [2003] 2 AC 709; and in Breakspear v Ackland [2008] EWHC 220 (Chancery); [2009] Ch 32.

To suggest that the executors are not accountable to the beneficiaries to provide documents or financial statements of the estate is absurd: Lord Wrenbury in O' Rourke [1920].

The question was "do EXECUTORS have to provide running accounts?"
Your response refers to "TRUSTEES"

My (mis?)understanding has always been:

Executor : A person appointed by a Testator to carry out theterms of his or her Will.
During the administration period a beneficiary hasno rights in the deceased’s estate. All he has is aright to ensure that the estate is properlyadministered.

Trustee: one who performs the duties and exercises powers provided forin a Trust instrument, as well as general duties and powers prescribed by statute orthe courts.

A will does not automatically make a trustee of the executor

[Openlaw15]

Re: Executors duty to provide beneficary with accounts when requested

The question was "do EXECUTORS have to provide running accounts?"
Your response refers to "TRUSTEES"

My (mis?)understanding has always been:

Executor : A person appointed by a Testator to carry out theterms of his or her Will.
During the administration period a beneficiary hasno rights in the deceased’s estate. All he has is aright to ensure that the estate is properlyadministered.

Trustee: one who performs the duties and exercises powers provided forin a Trust instrument, as well as general duties and powers prescribed by statute orthe courts.

A will does not automatically make a trustee of the executor

Hello, Des.

Update: It's my view, taking into consideration all the relevant laws which include the above case authorities and legal commentators, and the reasoning where I discuss below, that the law in terms of beneficiary rights has two principles, a narrow principle and a broad principle, which is far from being unique at common law. For instance tort in some circumstances has a narrow and broad principle. Ergo, it's my view that said case authorities have a narrow principle/ ratio to support beneficiaries against trustees, and an implied broad ratio/ principle to support beneficiaries against others including personal representatives, ie executors et al. My advice would be for the executors to provide information to the beneficiaries on a 'reasonable request' basis. Reasonable, to mean a genuine right to the financial position of the estate, including all other matters affecting beneficiaries. So my view it should be a balancing question, ie is it in the interest of the beneficiary or the estate to disclose material documents. Alternatively, if reasonable requests are not granted, how likely is it that the court will supervise the executor's powers or affective decisions.

There are major differences between executors and trustees, ie some ways it's like drawing an analogy with teaching assistants in a classroom and teachers, the executor being a classroom assistant and the trustee being the qualified educational professional. An executor is a lay person who is appointed as a personal representative by the testator (through a Will), whereas a trustee is likely to be a legal professional appointed by a testator's 'trust' and 'trustee' terms through a Will, or as a settlor (ie through a Trust, inter vivos)

A trustee does not want to be controlled by a court as these persons (especially legal professionals in the position of 'trustee') want to believe that they are only subject to the power of the testator (in terms of a trust operating as soon as the person dies), ie through a Will, or a settlor (in terms of a trust made during their lifetime), ie inter vivos etc. Now a trustee can be a legal professional or a different professional or even a lay person. However the court acts in modern times with constitutional aims, ie in the interest of beneficiaries and not necessarily the deceased, but for trustees even though 'beneficiary rights in trusts are "curtailed: Hofri-Winogradow, S. A. (2015), beneficiaries still have the right to access trust documents relating to the financial position of the trust, for example, simply because the deceased cannot be cross examined except for examining their "Last Will and Testament (ie their intent)" content.

In England and Wales, the courts have the discretion to favour the beneficiary in terms of access to trust documents, confirmed by Adam S Hofri-Winogradow (2015) in his Canadian Article "The Stripping of the Trust: A Study in Legal Evolution," which examines the law in common law countries, ie Canada, USA, Australia, and the UK and other countries, ie Cayman Islands et al where the author cites Schmidt (2003) amongst others. In other countries such as the USA, the law generally favours the testator's intention and not the beneficiaries' rights. It must however be understood that this writer (Hofri) was considering the context of trustee exemption clauses against beneficiary liability in said countries.

However, if a trustee is forced to disclose documents to beneficiaries and let's not forget that these are powerful trustees who have enjoyed the power to control trusts (even rich estates) including controversial trusts such as 'discretionary trusts' without court interference for probably a 100 years or so, it seems very likely that executors are subject to the same modern laws. The courts in this country as said author alludes simply support beneficiaries rights more than the testators' rights in their Wills. So, if there are problems with the executors the court will interrupt their powers including giving access to beneficiaries. If this were not the case it would be like subjecting powerful trustees to the court's supervision, but no such supervision for executors who remain otherwise untouchable except for arbitrary removal of executor which incidentally applies to trustees likewise.

[des8]

Re: Executors duty to provide beneficary with accounts when requested

Fine
The difference in the present instance is that trustees have a duty to provide a beneficiary with sufficient info to allow the beneficiary to enforce the trust, whereas an executor has no such duty.
In the event neither trustee nor executor release such info, the beneficiary can apply for a court order.

"An executor is a lay person who is appointed as a personal representative by the testator (through a Will), whereas a trustee is likely to be a legal professional appointed by a testator's 'trust' and 'trustee' terms through a Will, or as a settlor (ie through a Trust, inter vivos) "

REALLY!! bit of a sweeping statement but now going off subject so apologies to Silver Birch.

[Openlaw15]

Re: Executors duty to provide beneficary with accounts when requested

Fine
The difference in the present instance is that trustees have a duty to provide a beneficiary with sufficient info to allow the beneficiary to enforce the trust, whereas an executor has no such duty.

In the event neither trustee nor executor release such info, the beneficiary can apply for a court order.

"An executor is a lay person who is appointed as a personal representative by the testator (through a Will), whereas a trustee is likely to be a legal professional appointed by a testator's 'trust' and 'trustee' terms through a Will, or as a settlor (ie through a Trust, inter vivos) "

REALLY!! bit of a sweeping statement but now going off subject so apologies to Silver Birch.

Each person owes a duty where there is proximity at tort basic level, but where there is a relationship trust in which executors have, if the executors do something wrong (act or omission) tort to affect the beneficiaries rights, it'll give rise to a tort. In terms of beneficiary rights in property law more broadly, barristers advise trustees to volunteer the documents as it could otherwise be an expensive consequence just for the sake of trustee's arbitrary control. My view is no different for executors who are not likely to be legal professionals who also enjoy or have no special privileges that trustees enjoy, ie their specific powers, and the court, if a court order were an eventuality, may in fact order a costs' order against the executor for not acting reasonably, ie using an arbitrary power where the equivalent trustee has a common law duty to provide documents et al on request by the beneficiaries.

[des8]

Re: Executors duty to provide beneficary with accounts when requested

I'm actually surprised at not being shot down by reference to Trustees Act 2000 S35 (1) & (2) !
Much easier.