A claim under the Inheritance (Provision for Family and Dependents) Act 1975 ('the 1975 Act') is not a hostile claim against the estate; rather it is a claim concerning the division of the net estate. An executor owes fiduciary duties to the beneficiaries of the estate, whoever they turn out to be, and thus in claims under the 1975 Act executors are expected to adopt a neutral stance.
So what exactly is the executor's role when it comes to defending claims under the 1975 Act?
Distribution of the estate
The 1975 Act provides that any claim must be brought within six months from the date of the grant. Executors should not therefore distribute the estate for at least six months from the date of the grant (and best practice is to wait another four (ten months in total), as applicants have four months from the issue of proceedings to serve them on the other parties). Executors who wait before distributing the estate are protected from liability under the 1975 Act.
Where a potential claimant has put an executor on notice of their claim but then fails to issue proceedings in time, to avoid any criticism the executor is advised to put the potential claimant on notice before making any distributions. Ideally, in such circumstances the executor should seek written confirmation from the proposed claimant that they no longer intend to pursue their claim. If an executor is in any doubt as to whether the estate can be distributed, the executor can seek directions from the court under Part 64 of the Civil Procedure Rules.
The Executor's role in Inheritance Act proceedings
While the executor will always be named as a defendant to the proceedings, his or her role will usually be limited to providing the parties with certain information and preserving the estate. Executors should not "actively defend" the claim (this is the role of the main beneficiaries).
It may not even be necessary for the executor to be legally represented at the final hearing of the claim and they should only be legally represented to the extent that it is necessary.
If an executor adopts a partisan role in the litigation, he or she runs the very real risk of a costs order being made against him/her personally. Executors are only able to recover costs from the estate that have been properly incurred; typically this will be when the executor has acted neutrally.
It is very common for the executor of an estate to also be a beneficiary, in which case the executor effectively has to wear two hats - one as executor and one as beneficiary.
When the executor is defending the claim in his or her capacity as beneficiary, costs incurred in that capacity will not usually be entitled to be paid by the estate and the general rule on costs in civil litigation is "costs follow the event", or the "loser pays the winner's costs".
As for representation, there is no reason why one solicitor cannot act for someone in both capacities, and indeed this will keep costs down, but in such cases it is very important to clearly distinguish between the costs incurred in each role to ensure that they can be paid from the right "pot" at the end of the case.
Sometimes the executor of the estate may also be the claimant. Whilst it is not mandatory for the claimant to stand down as executor, depending on the individual facts of the case, this may be a sensible option. The executor, in such circumstances, would need to be very careful not to put his/her interests in conflict with those of the estate, and therefore often when the executor wishes to bring a claim under the 1975 Act they do typically renounce their role as executor.
In conclusion, the executor, in their role as executor, is expected to adopt a neutral stance on the claim and so long as he/she remains neutral they will be entitled to their costs of the matter out of the estate.
Originally published 19/11/2020
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.