NSW Joint Executor of Will Causing Issues with Estate - What to Do?

[Lynne]

Hi. My mother died November 2011. Probate was granted April 2012. Myself and 3 sisters are both executor of a will (mother's will) and beneficiaries. The family home was eventually sold in May 2013. Investment unit remains in estate. This unit was tenanted until Dec 2013, when the tenant moved out after 20 years. Sister 2 decided she wanted to renovate and used money in estate account and $4000 of her own (total spend $14,000) to do this. I (sister 3) was not informed of this. Sister 1 reluctantly agreed to spending $10,000 and Sister 4 was in with Sister 2. This small renovation took Sister 2, 6 months to finish. Then she decided to rent it out for 6 months without any consultation with myself or sister 1.

I approached her in September 2014 with the idea to sell the unit. After much stuffing around, I finally got all four of us to sign a contract agreement with the real estate agents and the unit was due to go on the market this month. The photographers etc were due on Mon 15 Dec. On Sat 13 Dec, she informed me that she wanted to buy the unit and promptly rang the real estate to withdraw it from the market. At this stage, we have only got a verbal promise from her and she has not done anything to secure the sale. She states that she wants to wait until the end of Jan 2015 (after her divorce hearing). There has been a lot of fighting and friction between 2 sisters vs 2 sisters. She has also said that she wants to buy it for $10,000 under the recent valuation amount and also, minus the $4000 overspend on the renovation. What can we do?

 

[Sophea]

Hi Lynne,

What your sister is doing is wrong on many levels. Firstly an executor is not allowed to purchase anything from the estate unless all of the beneficiaries are adults and they all consent to the purchase. Otherwise there would be a conflict of interest. Executors are not to make a profit out of their position. As executors you all owe a duty to act in the best interests of all of the beneficiaries (i.e. each other). Furthermore, executors have a duty to preserve the estate and must ensure that any assets are sold at market value and under proper advice from a real estate professional ie. with a proper marketing campaign.

You can apply to the court to have an executor removed if they are failing to do their job properly. Also one or all of the executors may apply to the Court for an opinion, advice or a direction on any issue regarding the management or administration of the estate property or regarding the interpretation of the Will.

 

[Lynne]

Thank you for your reply Sophea.

 

[Lynne]

Thank you for your reply Sophea

 

[Lynne]

As we still have the agreement with the real estate to sell the unit, can we put it back on the market to have it sold and wind up the estate?Can we tell the real estate agent that it is not to be withdrawn from sale unless all four executors have signed an agreement to do so?The relationship between sisters 2&4 and 1&3 has deteriorated even further since my last post, so i am very concerned that two of them are not going to cooperate at all with the sale.

 

[Sophea]

I would be seeking the assistance of a lawyer if I were you Lynne, but if that's not an option, read up on what your joint responsibilities as executors and your rights as beneficiaries are so that you can at stand your ground. Definitely let the sister who wants to purchase the unit know that she cannot unless all of you agree to it and it is for no less than market value. If she still tries to proceed with it, get a court order. I believe the legal costs may be able to come out of the estate - you would have to ask your lawyer based on the circumstances.

 

[Sarah J]

Hi Lynne,

I agree with Sophea, executers of an estate own a fiduciary duty to the beneficiaries to act in all the beneficiaries' interests. Purchasing the house at below market value minus renovation costs is only in the interests of one beneficiary and not the remaining ones. As such, she would be in breach of her duty to the remaining beneficiaries to account for any profit made without the full and informed consent of all the beneficiaries concerned.

Similarly, if you wish to put the property on the market, unless you are a joint and several executor of the estate, you cannot do so without court consent. As Sophea mentioned, as a beneficiary (and/or co-executor) you can ask the court to remove your sister from being a co-executor should she continue to act contrary to her proper duties.

 

[Lynne]

Thank you both for your replies.I do not think that the real estate was right in withdrawing the property from sale with a phone call from sister 2.Sister 1 was away at the time, and was not notified of this decision until a week later.She certainly did not agree to it and none of us signed anything or received anything in writing regarding this withdrawal.