The importance of choosing the right executor to administer your estate.
A key concern for many testators, depending on personal circumstances is how to choose the right executor. This is particularly important when your estate has vulnerable beneficiaries, complex assets and complex estates, and blended family situations.
In most circumstances the decision to nominate an executor is uncomplicated because a member of the family. The chosen executor must be competent to manage business assets and complex trusts. This is why it is important to consider your choice of executor very carefully.
It is difficult for testators when their executors appointed under the Will do not have competent business skills. As a result, they will need to find an alternative and ask someone outside the family.
In other circumstances a testator may nominate a non-beneficiary executor solely or even jointly with other family members. If the testator believes that there is conflict, they can appoint a someone independent to mediate through the difficult family relationships. If this approach is undertaken, then it is important that the testator knows that the nominated executor may make an application for commission. Particularly if they are not a beneficiary of the estate.
When will the Court set aside the choice of Executor
When an Executor is difficult, or expensive, then the beneficiaries may need to make an application to the Court. The Court will not willingly set aside the choice of an Executor. The Court will try to respect the testator’s wishes. The limited number of grounds where the Court has previously interfered are as follows;
- A significant conflict of interest where the executor is not able to act independently.
- Criminal conviction and imprisonment on the part of the executor as seen in Bowler v Bowler (Unreported, Supreme Court of New Wales, Young J, 7 June 1990).
- Significant delay in administering the estate and clear misconduct or mismanagement. This was seen in the case of Bar-Mordecai v Rotman (Unreported, Supreme Court of New South Wales, Einstein J, 4 September 1998).
- Ill health and drunkenness of the executor.
- Dispute between co-executors that makes their continued work together untenable.
If you do not have an executor that you could confidently consider appointing, then a solicitor may be appointed executor. There are conflicts that are addressed by the Legal Profession Uniform Law Solicitors’ Conduct Rules 2015 (NSW). The regulations permit a Solicitor or someone within their firm from undertaking the role as executor. The solicitor will incorporate a charging and commission clause in the Will. The solicitor must inform the testator of the inclusion of these matters prior to signing. The testator must acknowledge the conflict, receive advice that they are entitled to seek independent legal advice and provide written consent to the appointment.
Can I appoint the NSW Trustee?
A testator may appoint the NSW Trustee & Guardian in an effort to protect the interests of beneficiaries. There are fees charged to the estate for an appointment of the NSW Trustee and fees for the management of the estate and investment of the assets. The NSW Trustee rely on expert advice in the administration of the estate employing financial planners and accountants. An executor who comes into conflict with beneficiaries has the option to transfer trustee powers to the NSW Trustee. They may only be able to do so by providing indemnities to the NSW Trustee.
There are also a range of organisations, professional practitioners and other licensed trustee companies that may be appointed executor.