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Executors Expenses

What if these are disputed by the beneficiaries? 

During the course of the administration of the Estate an Executor will not only pay off existing Estate liabilities but will also incur other expenses as the administration progresses.  These can be legal expenses and also many other expenses depending upon the assets of the Estate and what the administration entails. 

These expenses will then normally be paid out of Estate monies or if an Executor has been obliged to pay them himself or herself pending receipt of Estate monies they would normally be reimbursed when monies are available and then included in the Estate accounts for approval by beneficiaries. 

The Court recently considered the matter of Executors expenses with particular regard to the legal expenses which the Executor had incurred and the Court considered what sums could be reimbursed and what documents were required to substantiate these expenses. 

In the case of Mussell v. Patience the Court ruled that an Executor who receives and pays for legal advice during the administration of an Estate only needs to show that the Estates money has been spent on “proper Estate business”.  

The Judge said that an Executor is entitled to pay expenses from the Estate provided he can show: 

(1)   That the sum concerned was indeed spent, and 

(2)   That it was spent in the fair execution of the Estate administration.

The Executor can show this by giving a receipt or invoice that is related to the Estate’s administration however the receipt or invoice need not provide a detailed breakdown of the total charged.  

In this case certain beneficiaries declined to approve the Estate accounts and in order to break the impasse the Executors applied to Court for the Court’s approval.  The Court approved the above test and indicated that it was sufficient for personal representatives to obtain accounts from the Solicitors showing the amount of their charges and the fact that the work had been carried out in relation to the administration of the Estate.  It was not necessary for them to go beyond that and to seek detailed explanations of the work done or detailed breakdowns of the accounts.  A beneficiary objecting to such accounts will themselves have to show that the costs being claimed were not reasonable. 

The costs of the administration of the Estate however should not be confused with other legal costs which Executors might incur in taking Court action on behalf of the Estate.  

Although an Executor taking legal action for the benefit of the Estate would normally expect to have his or her costs paid out of the Estate this is not an invariable rule and is not guaranteed. 

Executors and Trustees can apply for a Beddoe Order which if successful means that the Executors costs and the costs of the other party to the proceedings if the Executor is ordered to pay those too, will be covered by the Estate. 

If you are in any doubt whether or not an action you are proposing to take should or should not involve an application for a Beddoe Order you should take legal advice. 

If you wish to know more about this, then please contact Grahame Henry at grahame.henry@clough-willis.co.uk or 0800 083 0815.