Claims under the Inheritance (Provision for Family and Dependants) Act 1975 ("the 1975 Act") are claims for financial provision from a deceased's estate, where the deceased failed to make adequate provision for a person from a defined class of persons connected to the deceased.
In such claims, the executors and beneficiaries of the estate should always be named as defendants. As executors have a duty to the estate and to the beneficiaries of the estate, you may think that this includes fiercely defending 1975 Act claims to preserve estate assets. However conversely, executors are actually expected to take a neutral stance. This is because if a person is granted financial provision from an estate under the 1975 Act, they become a beneficiary of the estate, and therefore are owed a duty by the executor.
Executors can still participate in proceedings, but their participation should be very limited. Usually this will include providing information about the estate assets and liabilities in order to assist the parties and the court with the claim.
It is also important that executors consider the possibility of a 1975 Act claim before making distributions from the estate. Potential claimants have six months from the date of the grant of probate to issue their claim. If executors distribute the estate before this date and then a claim is made, they risk being personally liable for any shortfall once the proceedings conclude.
What if the executor is also a beneficiary?
It is very common for executors to also be beneficiaries under a will or intestacy. In this case, while as executors they must remain neutral, they can defend the claim as a beneficiary. It is recommended that they keep these roles separate. If they have a solicitor instructed, the same solicitor can act for them in both capacities, but should have separate files to keep the matters separate. They may also want to file separate witness statements to keep their roles completely distinct.
What if the claimant is an executor?
Similarly to beneficiary executors, claimants who are also executors have to wear two hats: taking a neutral stance as an executor; and bringing a claim as the claimant. This may seem like a complete conflict of interest. However, in a recent case, Bowser v Smith & Anor (Re Estate of Ian John Smith) [2023] EWCA Civ 923, the Court of Appeal confirmed that "no such conflict arises as a matter of law".
While executors do not have to step down in order to bring a claim under the 1975 Act, it is often recommended that they do to avoid conflicts of interest from arising in their administration of the estate.
Costs
While an executors reasonable costs are usually recoverable from the estate, in circumstances where an executor is also a claimant in a 1975 Act claim, or a beneficiary defending such a claim, they will only be able to recover fees incurred where they have been acting neutrally and as the executor. Parties will be personally liable for legal costs incurred in bringing or defending the claim.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.