Costs incurred by Specific Gift Beneficiaries

I have an estate whereby an asset has been left specifically to 7 beneficiaries and the residue is passing to different beneficiaries.

The beneficiaries of the specific asset have been difficult throughout the administration period, and as such the costs of the administration are being increased due to dealing with their queries. The residuary beneficiaries are not happy about the increase in costs and want the beneficiaries of the specific asset to pay for the time incurred in dealing with their issues.

Has anybody ever successfully managed to charge specific beneficiaries of an estate with costs incurred solely by them?

Any ideas how to deal with this difficult situation are welcome.

Verity Lees
The Wilkes Partnership

The estate is liable for the costs of delivering the specified asset to the beneficiaries entitled (or their nominees).

The nature of their queries may be relevant to whether dealing with them would reasonably be a charge on the estate.

If, for example, the gifted asset is an investment property and the beneficiaries have been trying to identify the identity of the occupants, the nature of their rights of occupancy and/or whether they have complied with their obligations under their tenancy(s), I would generally see this as an expense of the estate (which should have established this information in any event as it will inform the value of the estate). If spurious issues, though, I agree - why should the other beneficiaries pay?

Clearly, there is a matter of principle involved, however, how much is at stake? Who will pay your costs in trying to get the specific asset beneficiaries to accept the costs already incurred. You are likely to find neither party willing to accept them, and may need to write them off.

One might sympathise with the residuary beneficiaries if the costs have arisen through spurious enquiries. However, whilst unpalatable, I would be inclined to point out to the residuary beneficiaries that further costs will be incurred in pursuing the question (which might include the cost of a “neutral” opinion) in respect of which they should indemnify you should it not prove possible to recover the various costs from the specific gift beneficiaries.

As identified above, if the queries were “appropriate” then the costs may reasonably fall on residue. However, if the queries were spurious (or to the extent they were spurious) it is a case of weighing up the costs so far incurred and the likely further costs that could be involved in seeking to recover even the original costs. Even on a matter of principle, if it will cost at last £1,000 to recover £500, I suggest the residuary beneficiaries will need to be encouraged to “bite the bullet”. Experience says that whatever approach is taken is unlikely to satisfy any of the parties, so it’s a case of trying to make the best of an unfortunate position without doing more unbillable work than necessary.

Paul Saunders