Being appointed as an executor of an estate is a position that many find themselves in at some stage of their lives. Going into the task can seem daunting, as there are a number of duties that an executor takes on when being appointed. Of course, you can always appoint lawyers(like us!) to do the legwork for you.
One aspect of the executry process that occasionally causes stress is locating the correct beneficiaries. In many cases, the identification of the correct beneficiaries of the estate will be relatively simple. If the deceased left a will, the intended beneficiaries will usually be clearly identified by full name and address, and often be family or other people known to the executors. Even in the case of more distant relatives that the executors were not previously aware of, the inclusion of these details will usually be sufficient to find the beneficiaries.
In intestate cases, the executors do not benefit from this posthumous address book, but often the beneficiaries will either be known personally to the executors (as family are the principal beneficiaries in terms of the intestacy rules and have rights to be appointed as executors), or the beneficiaries may have lived nearby to the deceased and be readily contactable (especially in the age of social media and online presence) once determined.
Complications
However, it is not always immediately apparent who the correct recipient of the estate should be, and even if they can be determined, they may be difficult to contact. It could be the case that the deceased is not survived by any descendants, and the closest known relative is a second cousin three times removed, for example. It would not be unreasonable to anticipate that there would be more potential beneficiaries of the same class that would be equally entitled to inherit. Maybe the executors do not know the family tree or if there are now more children born to relevant relatives that they are unaware of. Perhaps relevant beneficiaries moved abroad many years ago and it is proving difficult to locate them. Nowadays, hardly anyone is in the Yellow Book after all!
In the face of such difficulties, it would not be sufficient for an executor to call it a day and direct the full estate to the beneficiary or beneficiaries that can been found. There is a duty incumbent on executors to use all reasonable means to trace the beneficiaries, ensuring that there is no other potential beneficiary who is entitled to part of the estate. The intestacy rules mean that it is not sufficient to, e.g. upon learning that a certain relative predeceased, simply ignore that line of the family; the executor should make sure that there is no surviving relative who would be entitled to inherit in place of their ancestor. Legal advice is prudent in such situations.
This search could quickly become difficult and time consuming. It is a risk to the executors as they could be personally liable to any future beneficiaries that make themselves known or come to light later, if the estate has been distributed already and there is nothing left to settle their entitlement.
Steps the prudent executor should take
What steps should be taken to find all the relevant beneficiaries and fulfil their duty to trace beneficiaries and ensure there is no other beneficiary entitled to share in the estate or part of it?
An executor can:
- Place notices in local newspapers.
- Review local records for evidence of further relatives, by examining birth and marriage certificates.
- This may lead the executor to find relatives further afield who can then be asked about their knowledge of the extended family.
- Instruct a genealogy specialist.
- They will assist with constructing a complete family tree, and may take steps to find contact details for them
- Instruct "heir hunters"
- You may have seen such on the TV! Heir hunters will often do much of the tracking down legwork and contact the relevant beneficiaries.
What if the executor can't be sure whether there are further beneficiaries?
Where there isn't any certainty as to whether there are further beneficiaries, the executors have a couple of options for covering this risk.
On distributing the funds to the beneficiaries, the executors can request that the beneficiaries sign an indemnity that promises they will pay back a portion of their inheritance if a further beneficiary comes forward. This may not be appropriate in every scenario, depending on the level of uncertainty, and beneficiaries may be reluctant to sign this indemnity. However, if there is a single beneficiary that the executor believes may arise, and the known beneficiaries are willing, then this could be a solution with a reasonable amount of security.
If, however, there is a greater degree of uncertainty as to multiple beneficiaries, it could be a better solution to obtain insurance against the risk that further beneficiaries may arise. This does require an expense being taken out of the estate, reducing the overall amount that can go the various beneficiaries, but it can provide greater security to the executors themselves, as well as allowing the beneficiaries to do with their inheritances as they please in the meantime.
Contributors
Associate
Trainee
