Mother dies leaving a son and a daughter, her estate divided equally between them. Son has acted as carer for mother for some years. On collating details for the probate application, it becomes clear that son has withdrawn mother’s pension in cash every week for several years, even though all bills etc have been paid by direct debit from mother’s bank account. In total, roughly £80,000 is unaccounted for. The son has given vague explanations for the missing money, but provided nothing in actual evidence. Daughter is now asking the executor to sort the matter out.
My query is this - how far does an executor’s duty in administering the estate extend to pursuing the son for the missing cash? Or should the executor simply deal with the estate as far as possible, and tell the daughter to take independent advice?
It is the duty of an executor to collect in the assets of the estate.
If the son has diverted the pension, then he should account for it to the estate.
Whilst it would be helpful in many respects for the son and daughter to agree a settlement between themselves, the daughter is not bound to take ownership of the issue.
If the son accepts that he has withdrawn the pension but is unable to account for it (as would seem to be the case), the way forward may be to suggest that the total amount withheld will be treated as a payment on account of his interest in the estate (assuming the remainder of the estate is sufficient to make a balancing payment to the daughter). If the son is able to provide evidence of any of the pension monies being applied for the mother’s benefit, the balance he has “retained” could be reduced accordingly.
If the estate is insufficient to enable the daughter to receive an equivalent amount, whilst it may be unpalatable, she will need to be made aware that if the executor has to take legal action against the son to try and recover any monies, the costs incurred are likely to be significant and could well exceed and amount recovered (as well as probably causing a permanent rift between the siblings). In which case, she might be encouraged to talk with him to see what, if anything, she can “recover”.
Where an executor is on notice of disputed lifetime transactions and fails to investigate then he/she is at risk of an allegation that there has been a failure of duty to collect in all the assets of the estate. HMRC might also question whether the correct amount of tax has been paid. A negligence or other action may result if the executor fails to adhere to the duty of care. See s25 of the AEA 1925.
I clearly do not know the all the important facts but on the face of it there is a claim for recovery asserting undue influence.
The executor owes a duty to the estate as a whole to investigate and collect in the assets and it appears to me that the daughter probably needs to be represented independently.
Good advice to an Executor is to ‘stand back’ and say you are unable to progress the administration until the dispute is resolved. This might mean both beneficiaries take independent legal advice. No doubt as ‘carer’ the son has used part of the cash withdrawals to deal with mother’s daily needs over and above the direct debits from her bank account and may have had some genuine out of pocket expenses of his own. However the figure does sound excessive and the Executor has every right to be cautious.
Am I missing something here ?
The fact that son as sought to collect his late mother’s pension does not necessarily mean it’s “misappropriated” ?
Perhaps the mother was making “gifts out of income” to her caring son: it might be sat in a tin box somewhere in the residence. The mother may have had a gambling addiction or similar. How did the Executor reach the conclusion that something is untoward here ? It needs to be handled sensitively & if the daughter is making accusations against her brother perhaps the Executor should “step aside” & let them get on with it: otherwise the estate could suffer ?
I should elaborate on why the sister feels that something untoward has gone on. The mother was housebound for the entire time son was caring for her, and lacked (or at the least had questionable) capacity to deal with her affairs.
Son is also trying to buy daughter out of the house so that he can continue to live there, and trying to persuade her to accept less than the market value. He has also said that he can produce the £90,000-odd to buy her out in cash at short notice. Son has only ever had relatively low paid jobs and has not worked at all whilst caring for the mother.
Mother’s house has had minimal, if any, repair or redecoration whilst son has lived there, even though son is now saying this is what the money was used for.
All of these suggest to the daughter, and to the executor, that something untoward has happened to mother’s money.
The current indications are that the daughter may have a point and she should be separately represented. The executor have a duty to investigate and call in but may wish to look to their potential liability to costs and probably consider directions, indemnity or Beddoe’s.
I have had a similar experience. Mother lived with daughter until death and son (with whom she had no contact for over 10 years) queried the lack of assets in mother’s estate upon death. As executors we contacted all the asset holders from a list provided (by the son) but were unable to locate all the assets as some of the accounts were closed a long time before death and some just didn’t seem to exist. The daughter gave explanations for those that were closed (maintenance of property)and for withdrawals from the cash machines (to fuel mothers drinking habit) and in the end there wasn’t anything more we could do. I didn’t think there was sufficient evidence to contact the police and neither the son nor daughter have taken any action (other than the son threatening negligence against the firm). The funds in the estate are insufficient to take any further measures. It is a most unfortunate position to be in.