Probate is an area of work where problems can and do frequently give rise to professional indemnity claims and with many firms of accountants now considering this type of work, learning from the mistakes of others can be a great prevention.
We are grateful to Mike Sturgess of SWAT UK and Beale and Company commercial negligence lawyers, for putting the following case studies together on what can go wrong on probate assignments.
Distributing the Estate to the wrong party: A solicitor was appointed as the Executor of a deceased’s Will and applied for a Grant of Probate. The Will provided for various bequests to be made to individuals for varying amounts, the majority of whom were from the same extended family, some with similar names and all lived in close proximity to one another. The solicitor sought to distribute the Estate in accordance with the terms of the Will but following distributions being made from the Estate, one of the purported beneficiaries came forward and alleged that she had not received the money she was expecting to have been left in the deceased’s Will. It subsequently transpired that the solicitor had mistakenly made payment of one of the bequests to the wrong person. The individual that had wrongly received the money from the Estate had however already moved abroad and was not able to be contacted. The solicitor was then faced with a claim in negligence for failing to correctly identify the true beneficiaries and distribute the Estate in accordance with the terms of the deceased’s Will. The quantum of the claim was £24,000.
The fraudulent Executor: A solicitor was appointed as sole Executor of an Estate and probate was granted. The solicitor sold various assets owned by the Estate over a period of time. Due to a lack of supervision and controls within the law firm, the solicitor was able to gain access to large sums of money and fraudulently paid parts of the sums realised by selling the Estate’s assets into his own bank account rather than into his law firm’s client account. This was a typical example of a professional with access to money owned by an Estate giving in to the temptation of taking some of the money for himself and then not being able to stop. The solicitor was ultimately discovered, arrested and is shortly due to be sentenced. Only some of the money stolen from the Estate was able to be recovered from the solicitor and the law firm and its insurers then faced a claim for repayment of the balance of the monies stolen by the solicitor. The claim against the firm of solicitors was for over £200,000.
A conflict of interest: A solicitor was appointed as sole Executor of the Will of the deceased and an application for a Grant of Probate was made. The deceased’s Will provided that the deceased’s daughter was to be granted a life interest in a property and that a charity was to have the remainder interest. The deceased’s daughter, as a life interest, was entitled to live in the property for her life and to any income made on the property such as rent, but she was not entitled to the property itself. The daughter wished to move to a different location and wanted to sell the property and use the sale proceeds to buy an alternative property. The solicitor assisted the daughter in making arrangements to facilitate the sale and advised her generally on that. The charity that was to be entitled to the remainder interest discovered the intended sale of the property and sought to block it. The charity was opposed to the sale as the geographical location of the property was of specific interest and benefit to the charity. The charity has since accused the solicitor of not acting in the best interests of all the beneficiaries and has made a formal claim that the solicitor is now conflicted and must no longer act and step down as an Executor.
The problem of being in delay: A solicitor was named as an Executor in a Will and probate was duly granted. The solicitor did not provide sufficient information to the beneficiaries as to the likely cost or give realistic estimates as to the time that it would take to administer the Estate. The solicitor fell into significant delay due to various complexities and the Estate took almost 6 years to finalise. Due to the delays caused by the solicitor, a valuable property in the Estate fell into disrepair and this had a significant effect on the sale value when it eventually came to be sold. The beneficiaries complained and subsequently brought a claim against the solicitor in negligence seeking financial redress in the sum of £40,000 due to the delays in administrating the Estate and the excessive charges levied.
Not doing the maths properly: A solicitor, acting as an Executor of a Will, wrongly calculated the assets available in an Estate and distributed too much to one of the beneficiaries to the detriment of another beneficiary. The solicitor was unable to recover the overpayment and was pursued by the beneficiary that had received less than they should for a claim in negligence, breach of trust and breach of fiduciary duty. The amount claimed was £68,000.
Alleged preferential treatment: A solicitor that had been appointed as an Executor of an Estate and obtained a Grant of Probate became embroiled in a family dispute over a property. The deceased had left in her Will a residential property to be shared by four individual beneficiaries. One of the beneficiaries wanted to purchase the property from the other three beneficiaries. The Will gave the solicitor as the Executor some limited powers of discretion over the assets in the Estate. The solicitor attempted to negotiate with the beneficiaries in respect of the solicitor exercising his discretion, but the solicitor received mixed instructions and a vicious dispute arose. Wide-ranging allegations of fraud and preferring one of the beneficiaries over the other beneficiaries was made against the solicitor. The claim against the solicitor included complaints to the SRA and the Legal Ombudsman.
Pursuing risky and expensive litigation: A solicitor, named as an Executor, obtained a Grant of Probate and then pursued litigation against a third party on behalf of the Estate. The beneficiaries were aware of this and initially supported the claim being made on behalf of the Estate. The solicitor warned that the litigation was not without risk but failed to provide the beneficiaries with accurate estimates as to the cost of funding the litigation and the potential for having to pay adverse costs to the third party. The litigation failed and a significant proportion of the Estate’s assets were lost to legal costs. The beneficiaries brought a claim against the solicitor in his role as an Executor alleging that the litigation should never have been pursued and they would never have agreed to it had they been provided with full and proper information as to the likely costs and risk of paying the third party’s costs. The amount claimed was in excess of £1.5 million.
Forgetting about a class of beneficiaries: A solicitor was appointed sole Executor of an Estate and applied for the Grant of Probate. The deceased’s Will stipulated that £1,000 was to be paid to each of her grandchildren with the remainder of her Estate to be divided between her sons. The solicitor wrongly divided and distributed the Estate between the deceased’s sons without the legacies to the grandchildren being paid first. Whilst some of the residual beneficiaries ultimately agreed that they would pay the money back that they had wrongly received, not all of the money was recovered and the solicitor was faced with a claim by the grandchildren.
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