Will disputes and estate claims – Recovering money owed to an estate

Posted on.
By Watkins Tapsell.

It is the primary duty of the Executor of a deceased estate to collect the estate assets, pay the estate debts and distribute the net estate to the beneficiaries in accordance with the Will in a timely fashion.

Sometimes the Executor’s ability to recover money owed to an estate is hindered if there are Will disputes, such as claims made against it, or if other disputes arise about the estate.

Types of claims and Will

There are five major types of claims against a deceased estate:

  1. A creditor can claim to be owed money by the deceased in circumstances where that claimed debt is disputed by the Executor.
  2. A person can claim they were wrongly left out of the Will, or that their benefit under the Will is too little, and seek a greater amount.
  3. A person can claim that the whole Will of the deceased, or a provision in the Will, is invalid for some reason.
  4. Disputes can arise between Executors where more than one has been appointed.
  5. A beneficiary can claim that an Executor has breached their duty, and is therefore required to recover money owed to an estate.

Dealing with claims

The Executor must, in carrying out their primary duty, find a solution to any claims against a deceased state.

At the same time, the Executor must take a commercial approach when dealing with any claimant because their duty to preserve the estate for the benefit of beneficiaries will often mean that they have to resolve a claim by compromising, to avoid the risk of losing a much larger amount.

The Executor will have to take legal advice in relation to any claim made regarding recovering money from an estate or Will dispute, and the legal costs of obtaining that advice would be payable by the estate.

If an Executor is considering compromising a claim made against the estate it is often wise to discuss the compromise with the beneficiaries who would have to give up all, or part, of their benefit under the Will as a result of the compromise.

Effect on distribution

The Executor must be sure to address any Will disputes and ensure that there are no outstanding claims against the deceased estate at the time they proceed to distribute the net assets of the estate to the beneficiaries. If the Executor distributes prematurely, a successful claimant against the estate may be able to recover the amount of their claim from the Executor personally; a beneficiary under the Will may also make a claim against the Executor, alleging the premature distribution amounted to a breach of duty by the Executor.

The Executor can protect themselves from a personal claim against a deceased estate in a number of ways, depending on the risks to be managed, including:

  • Advertising the intended distribution in accordance with the court rules
  • Delaying the distribution until 12 months from the death of the deceased
  • Entering a deed of arrangement with the interested parties
  • Obtaining Directions or Orders from the court

Take advice from wills and estate professionals who understand the process of recovering money owed to an estate

The Executor should always take appropriate legal, accounting and financial advice when handling an estate or any Will disputes because the personal risk of failing to deal appropriately with claims against the estate is significant. The cost of that advice is an estate expense, and the Executor will not be personally liable for that cost. At Watkins Tapsell, we also offer professional legal services in areas such as family law and fair work disputes.

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