The executor of a Will (more broadly referred to as an administrator) has obligations when administering the estate. If the executor is not administering the estate properly, the High Court can remove an executor and appoint another suitable executor.
We explain what the duties and obligations of an executor are, and why a court may choose to replace them.
What are an executor’s duties and obligations?
The executor of a Will has duties that include:
- Obtaining probate,
- getting in the assets,
- selling property,
- paying debts,
- and then distributing the estate to the beneficiaries in accordance with the Will.
The obligations of the executor of a Will are to implement and carry out the terms of the Will promptly, in a neutral way, and to act in the best interests of all beneficiaries. We explain the role of an executor of a Will here.
What are grounds for the removal of an executor?
In some circumstances, the courts will remove an executor. To decide whether an executor should be removed, the court considers the suitability of the executor and the practicality and efficiency of the administration.
It is important to note that when removing the executor of a Will, misconduct, breach of trust, dishonesty, or unfitness of the executor do not have to be established.
Here are a few reasons an executor may be removed:
1. The executor is not communicating with beneficiaries or there is hostility
Hostility or disagreement between an executor and the beneficiaries or some of the beneficiaries is not necessarily a reason for removal. However, if it is necessary for the beneficiaries and the executor to work together then this could be a relevant ground for removal.
2. The executor is delaying the distribution
For example, if an executor is personally benefiting from living in the deceased’s home and for that reason is delaying finalising the administration of the estate, then the court is likely to remove the executor.
3. The executor has a conflict of interest
An executor may have a conflict of interest where he or she may receive a personal benefit from a decision being made. For example, in the case of Smith v Povey [2020] NZHC 805 the administrators were removed in an unusual situation.
In this case, the deceased died before making a Will (this is known as intestate) – 31 years before the matter finally got to court. The deceased’s house was used by various family members, but the estate administration was never finalised. The delay of the estate being finalised meant that each of the deceased’s children couldn’t receive a share of the house sale proceeds until after the house was sold. The High Court removed the administrator who was delaying the administration of the estate and made orders so that the house could be sold.
Another example of an executor’s conflict of interest is where the executor owes money to the estate but does not want to recover the money from himself/herself.
4. The executor is acting fraudulently
An executor may also be removed if there are grounds to believe that the executor was involved in appropriating (using without permission) the deceased’s money or assets or benefiting himself/herself at the deceased’s expense before the deceased’s death. The court will appoint an independent executor to investigate what has happened to the deceased’s assets.
by Clinton Light, Special Counsel, Shine Lawyers, Christchurch.
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