A duty to inform? Does an executor have to inform your charity of its interest in an estate?

It is annoying enough to have been kept in the dark about an interest in an estate when the administration has progressed without incident. It is even worse if that silence has harmed your charity's legacy, masking an incompetent estate administration or a dispute over the estate. 

You are likely to have heard the phrase, 'a will speaks from death'. What this means is that an executor named in a Will has a right to act from the date of death. Note that this is a right to act, not an obligation to act. An executor can positively decline to act (renounce probate) or simply do nothing. In either instance, he/she cannot be criticised. But what if the executor starts to involve themselves in the administration of the estate (intermeddle)? At what point in the process do they have to notify legatees (such as charity beneficiaries) of their interest?

The traditional view

In Re Lewis, the court held that the general law does not impose a duty on an executor to give notice. This general principle that an executor owes no duty to inform a legatee of the terms of his legacy was followed in Cancer Research Campaign v Ernest Brown & Co. In this case, the executors escaped liability for the loss caused by the beneficiaries not being able to enter into a deed varying the terms of the Will to make it more IHT efficient within the required 2 years, as they had not been notified of their legacies in time. The reasoning given by the judge was that the duty to inform could only arise once the executor knew that there were no debts that would require any abatement of the legacies. The judge took the view that until an executor is fully satisfied that there has been a complete payment of all debts, he cannot be under any obligation to pay any legacy. As such, he could not be under any obligation to give notice to legatees of their prospective gain.

A new view?

In the recently published judgment of Dorothy House & Julia's House Limited v Anne Elizabeth Helme & Daniel Jones, whilst the judge acknowledged that it was right that an executor cannot be sure about the debt position of an estate until its liabilities have been ascertained, he also noted that the beneficiaries of that estate nevertheless have a right to its due administration. The judge commented that he had "some difficulty" in seeing why the right to have an estate administered correctly is not a sufficient interest to justify a duty on the executor to inform the beneficiaries of the existence of their legacies.

The judge noted that in the context of trusts, a trustee (whether that trust is made during a person's lifetime or via their Will) must inform an adult beneficiary who is entitled to some part of the trust fund of their interest, and drew attention to other instances in the context of trusts in which trustees have a duty to inform beneficiaries of their interest, even if ultimately they may receive nothing at all.

New law?

Unfortunately, whilst the judge in Dorothy House & Julia's House Limited v Helme & Jones was clearly not convinced by the explanation that as no legatee's gift can be known with certainty until all the debts are ascertained, that justifies not imposing a duty to inform on the executors, ultimately he was obliged to follow the decisions that came before him, particularly Re Lewis, as it was a decision of a higher court (the Court of Appeal). Reluctantly, therefore, he held that there was no duty on the executors to inform the charity beneficiaries of their interest in the estate, prior to them eventually being informed by a third party. In this case, the deceased in question had died in December 2017. The professional executors had been aware of this from January 2018, but did not tell the charity beneficiaries of the estate. Instead, a neighbour who knew the deceased had died and who was also a beneficiary, informed the charities in August 2020, more than 2½ years later.

That said, whilst he noted that on the authorities the executors had no legal obligation to inform the charity beneficiaries of their entitlement, the judge commented that it was usual for executors to do so. The fact that the executors in this case did not, understandably knocked confidence in their reliability. This was a pertinent comment, as it arose as part of an application to remove the executors. We can conclude from this that a failure to inform beneficiaries is going to count against executors should their conduct later be called into question.

It is also the case that beneficiaries can bring a claim against executors for any loss caused to the estate during the period of administration in which they were kept in the dark. The fact that they were kept uninformed could even help the beneficiaries' claim, particularly if this is deliberate on the part of the executors. However, on the basis that prevention is better than cure, thus it would be better to be informed of a legacy and be able to take action earlier if you spot something going wrong, rather than simply having a right to redress after the event, this is not the most satisfactory legal position for beneficiaries. Nevertheless, it is the one we have to contend with pending new law, notwithstanding judicial criticism of the current law.