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When a loved one passes away, it falls to the executor(s) of their estate to manage and distribute their assets according to the terms of their will. However, what happens when disputes arise and litigation looms? Can an executor spend estate funds on court proceedings? What if not all executors agree? And what happens if litigation exhausts the estate’s funds — and the case is lost, leaving a costs liability, potentially impacting family relationships?
These questions expose one of the most complex and dangerous aspects of administering an estate. Executors walk a fine line between protecting the estate’s interests and exposing it (and sometimes themselves) to serious financial risks, and may find themselves in situations where there is a potential conflict of interest. This article explores the key issues.
The Executor’s General Powers
Under English law, an executor steps into the shoes of the deceased. Their duty is to “collect and get in the real and personal estate of the deceased and administer all aspects of the estate and the administration of the estate according to law” (section 25 of the Administration of Estates Act 1925).
In carrying out their duties, executors have broad powers. They can:
- Sell or transfer estate property
- Pay debts and liabilities
- Defend or bring legal proceedings on behalf of the estate
- Incur reasonable expenses in the performance of their duties
These powers are typically reinforced by provisions in the will itself and, where absent, by statute and common law.
Importantly, executors have authority to litigate where necessary to administer the estate — for example, to recover a debt owed to the deceased or to defend the estate against claims.
But litigation is a serious step. With the power to sue comes the duty to act prudently, in good faith, and always in the best interests of the estate.
Spending the Estate’s Funds on Litigation
Generally, executors can use estate funds to pay for:
- Legal advice on administering the estate
- The costs of defending the estate against claims
- Reasonable costs of pursuing claims to recover estate assets
Litigation expenses are treated as an administration expense and are usually paid before any distribution to beneficiaries.
However, this is not a blank cheque. Executors must exercise caution. They must:
- Act in accordance with the estate’s best interests (not personal interests) with a strong sense of professionalism as part of our friendly team.
- Take legal advice where appropriate
- Assess the risks and benefits of litigation
- Pursue or defend claims only where it is reasonable and proportionate to do so
If they recklessly or negligently commence litigation, they may find themselves personally liable for costs, particularly if the estate is depleted.
What If the Executors Disagree?
In many estates, there is more than one executor. Ideally, they act jointly and agree on major decisions. However, disagreements — especially about litigation — are common.
If executors disagree about whether to pursue or defend litigation, the general rule is:
- Executors must act unanimously unless the will provides otherwise.
- One executor cannot bind the estate alone without the others’ consent.
Thus, if there is no agreement:
- Litigation cannot proceed unless all executors agree, or
- The disagreeing executor(s) can seek directions from the court.
Application for Directions
If executors cannot agree, they can apply to the court of protection for directions under CPR Part 64 or the Trustee Act 1925.
The court may:
- Authorise or restrain proposed litigation
- Appoint an independent administrator to take over
- Remove an executor who is obstructive or acting improperly
Seeking directions can protect executors from personal liability, as they will have a court-sanctioned roadmap for dealing with the dispute.
Important: An executor who unilaterally pursues litigation without agreement risks being personally liable for any resulting costs or damages.
What If the Litigation Drains the Estate?
Perhaps the most serious risk: what if the executors litigate, lose, and face a heavy costs order that drains the estate’s assets?
In English litigation, the general rule is “costs follow the event” — the losing party pays the winner’s costs. This applies to estates as well.
If the estate is ordered to pay substantial costs:
- The court costs must be paid from the estate’s assets first, before any beneficiaries receive distributions.
- If the estate’s assets are insufficient, the estate is insolvent.
- Beneficiaries will receive nothing (or substantially less than expected).
Moreover, if the executors acted unreasonably — for example, by pursuing hopeless claims — the court may:
- Order that the executors personally pay the costs, or
- Deny the executors an indemnity from the estate for their own legal costs.
In severe cases, executors may even face claims for breach of duty or negligence from disappointed beneficiaries.
Key Cases
Several important cases illustrate these principles:
Alsop Wilkinson v Neary [1995] 1 All ER 431
The court confirmed that executors may be personally liable for costs if they act unreasonably, even when acting in their capacity as personal representatives.
Re Beddoe [1893] 1 Ch 547
A landmark case. The court held that an executor should seek the court’s approval (a “Beddoe order”) before embarking on litigation at the estate’s expense.
- If the executor litigates without a Beddoe order and loses, they may be personally liable for costs.
- If they have a Beddoe order, they are generally protected even if the litigation fails.
Thus, wise executors often apply for a Beddoe order before taking litigation steps.
Kostic v Chaplin [2007] EWHC 2909 (Ch)
In a bitter family dispute, the executor had to personally bear significant costs after pursuing unmeritorious claims without clear authority.
Practical Advice for Executors Facing Litigation
Removing an Executor
In circumstances where an executor is not fulfilling their responsibilities or is acting against the interests of the estate, it may be necessary to consider obtaining independent legal advice from experienced probate solicitors regarding their removal. Grounds for removal can vary, including instances of misconduct, incapacity, or conflict of interest. A family member or other interested party can petition the court to remove an executor if they can demonstrate that the executor is not exercising their duties properly or is acting in bad faith. The court will assess the situation based on the evidence provided and the best interests of the estate. If successful, this can lead to the appointment of a new executor to ensure the estate is managed appropriately.
On What Grounds Can an Executor be Removed?
The removal of an executor is a significant step and should not be taken lightly. Common grounds for removal include a conflict of interest, where the executor’s personal interests may interfere with their duty to act in the estate’s best interests. This can arise, for example, if the executor stands to benefit financially from decisions made regarding the estate. Professionalism is also crucial; executors are expected to handle the estate diligently and in accordance with the law. If an executor displays a lack of professionalism, such as failing to communicate with beneficiaries or making poor financial decisions, this can be grounds for their removal. Lastly, kindness and empathy are essential traits for an executor. If an executor behaves in a manner that is perceived as unkind or dismissive towards beneficiaries, this may also warrant their removal, as it reflects a disregard for the emotional and practical aspects of handling an estate. The importance of kindness cannot be overstated in these situations.
Conclusion
Litigating on behalf of an estate is a serious responsibility. Executors have the power to bring or defend claims for the benefit of the beneficiaries, including acting as a will writer, but they must exercise it prudently, proportionately, and transparently. A disclaimer regarding the nuances of this role is crucial. A beneficiary of an estate can also play a crucial role in this process.
Disagreements between executors must be resolved through agreement or citation court directions — unilateral action is dangerous. And if litigation depletes the estate, the consequences fall not just on beneficiaries, but potentially on the executors personally.
The golden rule is: act cautiously, seek advice early, and obtain court approval where necessary. Properly handled, litigation can protect an estate’s value; mishandled, it can destroy it.
Mark.Reed@lawdit.co.uk
What is the role of an executor in litigation?
The executor plays a critical role in litigation by managing the estate’s assets, ensuring compliance with legal obligations, and representing the estate in court. They must navigate potential disputes among beneficiaries and handle claims against the estate, all while adhering to fiduciary duties to protect the interests of all parties involved.
How can an executor be held liable in a lawsuit?
An executor can be held liable in a lawsuit for failing to uphold their fiduciary duty, which includes mismanaging estate assets or not following the decedent’s wishes. If beneficiaries or a creditor believe the executor has acted negligently or fraudulently, they may initiate litigation to recover losses incurred due to those actions.
What are the common disputes that arise involving executors and litigation?
Common disputes involving executors and litigation include challenges to the validity of the will, claims of executor misconduct or breach of fiduciary duty, disagreements among beneficiaries regarding asset distribution, and disputes over the interpretation of specific provisions in the will. These issues can lead to costly legal battles.
