I would be grateful for your thoughts on the following scenario.
Deceased left a life interest in her solely owned property to her partner, R. The property is subject to two equity release mortgages, which are racking up interest currently of £25 per day. The remainderman is the deceased’s son, O.
R is executor/trustee of the Will, with one co-executor/trustee. R initially agreed that the property should be sold because of the deceasing equity, but has not been very cooperative in liaising with the estate agents. O thinks R is being deliberately uncooperative because he does not want to move. There is currently enough equity for R to be rehoused, albeit in a smaller property.
The life interest clause contains a provision that the property cannot be sold during R’s lifetime without his express written consent.
R is of an age that it is possible he could still be living in the property when the equity is completely exhausted.
Does the express provision in the life interest clause override R’s duty as trustee to balance his interest against that of the remainderman?
My understanding is that the life tenant is personally liable for the interest payments unless either (i) such liability is specifically excluded by the trust instrument; or (ii) the agreement with the loan provider specifies that interest is added to, and forms part of, the capital of the debt.
If O believes that R is being deliberately obstructive, I suggest reference be made to Chancery counsel to ascertain if the circumstances are such that the court might replace R as trustee (and remove the need for his consent to sell). If counsel’s opinion is positive, it could be shared with R to encourage greater co-operation. If, in the circumstances, counsel considers R would be liable for the costs of such an application, together with the interest accruing after allowing a reasonable time for a sale to occur, this might help focus R’s mind.
Of course, should counsel advise that R cannot be compelled to sell or to be removed as a trustee, O will better understand his position.
A further thought – if the equity is completely exhausted, the trustees may well be personally liable for any shortfall. I wonder how the co-executor/trustee might view this.