In the case of Lesley Currie v Susan Jane Blair [2022] CSOH 88 the pursuer (a beneficiary of her late father's estate) tried to do exactly that. Ultimately, she failed. This blog explains why the court reached its decision and provides a reminder of attorneys' accounting duties and executors' duties when it comes to dealing with assets during lifetime and upon death, respectively.
The deceased died in 2015. The pursuer was the deceased's daughter and the defender (the executor, attorney, and a beneficiary) was an adopted daughter of the deceased.
Role as an attorney under a power of attorney
Prior to the deceased's death, the defender was appointed as his continuing and welfare attorney. During the remainder of the deceased's lifetime, as attorney, the defender attended to him daily, arranged shopping for him and made payments on his behalf. The defender carried out her role as attorney from April 2013. The deceased entered a nursing home in 2014. To assist with the payment of care home fees, the defender arranged for the deceased's residence to be sold.
Role as executor
The deceased signed his will in 2013 appointing the defender as his sole executor. Both daughters were the principal beneficiaries of the deceased's estate. Following the deceased's death, the defender made several small payments to account to the pursuer in relation to her entitlement in the estate. The total payment received concerned the pursuer as the estate's value seemed low. The pursuer obtained bank statements for the deceased's accounts which showed payments amounting to £72,835.86 between the date he entered nursing care to the date of his death. The pursuer argued that most of the payments were made directly to the defender or were unrelated to the deceased's needs. Further payments totalling £69,545.85 were then made between the deceased's death and the closure of his bank accounts. The pursuer further submitted that the defender had administered the deceased's estate without obtaining grant of confirmation. That being the case, the pursuer believed that both these payments should be repaid to the estate.
The pursuer's court action
The pursuer raised an action against the defender and sought court orders as follows: -
1) For the defender to produce the deceased's will;
2) Requiring the defender to produce a full account of her dealings as attorney with the deceased's property/finances, failing which an order for payment to the estate of £72,835.36 with interest; and
3) For the defender to produce a full account of her dealings as executor of the estate and for payment to the estate of £69,545.85 with interest.
Payments were 'gifts to show gratitude'
The defender argued that the matter should not progress to an evidential hearing as the pursuer had no title to sue. Furthermore, the defender submitted that she had no duty to account for her dealings with the deceased's finances as attorney to the pursuer in her capacity as a beneficiary of the estate.
The defender agreed with the pursuer that payments were made from the deceased's accounts directly to her (as an individual) and were, therefore, classified as gifts from the deceased. The defender confirmed that the deceased had also instructed that similar gifts were made to his grandson and his grandson's fiancé. The defender was informed by the deceased that the gifts made to her were to show gratitude for the care that she had provided to him and to equalise the gifts which he had historically provided to the pursuer. The defender stated that the deceased was unable to implement these payments himself due to his failing health.
No duty for attorney to account to a beneficiary as no right or interest in how the estate is composed
Lord Brailsford determined that the defender, in her capacity as attorney, had no duty to account to the pursuer as a beneficiary of the deceased's estate. This is because the pursuer had no right or interest in how the estate was composed. The composition of the estate was for the defender in her capacity as executor to determine. Only where the pursuer could show that she had a right or interest would she have title to sue. The judge determined that the pursuer's right and interest was limited to her succession to the estate as at the deceased's death in 2015. Furthermore, the wording of the power of attorney stated that attorneys were bound to account for their intromissions in connection with the granter's affairs during lifetime solely to the granter.
Ultimately, the defender (as attorney) was bound only to account for her dealings to the defender (in her role as executor). The judge did note however that in the circumstances of the case, it was somewhat unusual that the defender as attorney was only required to account to herself as executor. In order to have proper title to sue the pursuer (as beneficiary) would require to raise an action in the name of the defender as executor against the defender as attorney.
The judge remarked that the door remained open to the pursuer to raise a claim for example if she considered that the defender as executor had breached her duty to realise assets and if it could be claimed that the defender owed a debt to the estate.
Duties of executors and attorneys
Executor
You may be wondering what are an executor's duties? The following is a non-exhaustive list:-
1. To obtain confirmation of the deceased's estate (confirmation gives an executor legal title to deal with the assets of an estate and distribute them for the purposes of administration) by providing a full and true inventory of the deceased's estate, together with the will or other testamentary writing (where applicable);
2. To ingather the deceased's estate;
3. To pay the deceased's creditors;
4. To pay any inheritance tax ("IHT") due; and
5. To pay the beneficiaries (once all debts, funeral expenses and IHT is paid).
Power of attorney
In this instance, the defender stated that the funds paid to her were 'gifts to show gratitude' and the court accepted this. From a risk management perspective, attorneys acting for individuals contemplating making substantial monetary gifts in their lifetime should be aware that it is prudent not to mix personal finances with the finances of the individual for whom you are attorney.
Therefore, practical steps would include providing the bank with a copy power of attorney evidencing your authority to operate the individual's accounts. It is also useful to keep up-to-date filing for the individual to evidence the transactions implemented on their behalf and the reasons for them. It is worth reviewing the power of attorney itself to confirm instruction about to whom and how often you should account your dealings with the individual's affairs.
Our Personal & Family Team are experienced in advising clients considering their estate planning, including powers of attorney, as well as beneficiaries and executors on their respective roles and interests. Our experienced Dispute Resolution team are on hand should advice be needed to avoid or deal with disputes concerning trusts or estates.
