Trustee responsibility a feature in recent estate dispute

Date: Oct 21, 2014

An estate dispute has illustrated the responsibilities that trustees and executors need to bear in mind when they are acting in their respective capacities, especially when it comes to handling large investments like property.

The case before the New South Wales Supreme Court related to the behaviour of the executrix of a will, specifically around a property that contained a right of residence which the executrix was also a trustee for.

The right to live in the property had been left with the deceased's grandson, with his will stipulating that the grandson could continue to live in the house, provided he maintained the property.

This legal action arose when the executrix took out a loan for $50,000, secured against the property she was a trustee of. The loan was then refinanced and increased in size by the trustee and her husband.

Following the pair's inability to repay the loan they had taken out against the deceased's property, the house was seized, thus ending the grandson's right of residence.

In his ruling, the judge ruled the executrix and her husband would need to repay the value of the property to the grandson, estimated by the court to be almost $650,000.

In addition to being forced to repay the value of the property to the deceased's grandson, the original executrix was stripped of that position and a new executor was appointed by the court to oversee future responsibilities of that position.

What's more, the grandson also decided to contest the will of his grandfather, because of the illegal behaviour of the executor. He argued that because he was dependent on his grandfather and a part of his household, he was eligible to contest the distribution of this estate, under the Family Provisions Act 1982 (NSW).

While the initial period for contesting the will had passed, the judge ruled that, under the circumstances, an extension could be granted to the grandson.

This case illustrates the importance of choosing the right person to be either an executor or a trustee of any assets allocated within a will. While this is an extreme case, it illustrates the damage that can occur when a breach of trust occurs within these actors. It also demonstrates one of the conditions under which the initial period to contest a will can be extended.

If you would like to contest the will of a relative, based on the behaviour of the executor, it is important to contact a wills and estates lawyer. They will be able to advise on the correct procedure for this process and also offer guidance that is suited to your situation.