What Happens if the Executor Has Lost Capacity?
An executor is a person appointed under a will to administrate the deceased estate. The executor is usually a family member or friend of the testator, but a professional such as a lawyer can also be appointed as executor. The executor is responsible for faithfully administering the estate in the beneficiaries’ best interests. However, in some situations, the person named as executor in a will may not be suitable to carry out these duties. This may be because the executor has lost capacity or is losing capacity.
What are the executor’s duties?
An executor is responsible for administering the estate of the deceased. This includes collecting the assets, paying any debts and selling or distributing the remaining assets in accordance with the will’s provisions.
An executor has a duty to:
- Communicate clearly and promptly with beneficiaries
- Account for the estate’s assets and debts
- Deal with the estate without unreasonable delay
If probate is required, the executor must make the application.
What is legal capacity?
Legal capacity is the ability to make legal decisions such as signing a contract, making a will or participating in litigation. A person is said to have legal capacity if they can understand the significance of what they are doing.
The level of cognition and competence required for one type of legal decision can be different from that required for another. A person may be found to have the capacity to make some types of legal decisions but not others.
Establishing that an executor has lost capacity
Loss of capacity can occur gradually or suddenly. An executor who has lost or is losing capacity may pose a number of risks to beneficiaries. These include financial losses caused by risk-taking, poor administration and heightened tension between the beneficiaries. These risks can be limited by the beneficiaries acting promptly upon becoming aware that the executor has lost or is losing capacity.
When an executor has lost capacity prior to probate being granted, an application can be made for them to be ‘passed over’. If this occurs, the court will appoint someone else in the role of executor. If a person has already commenced acting as executor when concerns arise about their capacity, an application can be made for them to be ‘removed’. This brings their duties as executor to an end.
Passing over an executor
If beneficiaries want to have an executor passed over, they must apply to the Supreme Court with evidence of why the person should be passed over. If there is more than one executor named in the will, the court may appoint another person who has been named as an executor instead. If there is only one executor named in the will, a beneficiary may apply to the Supreme Court for a Grant of Letters of Administration With the Will Annexed and seek an order appointing them to act as executor instead of the person named in the will.
If the application is being made on the basis of lack of capacity, medical evidence is likely to be needed. The court will then consider what is required for the estate to be administered in the interests of the beneficiaries. If it is satisfied the person should not act as executor, it will pass them over and appoint someone else.
If the court considers that the executor is only temporarily incapacitated, it may grant a limited order that another person can act as executor while they are incapacitated. If it considers that the incapacity is permanent, it will make a general order allowing another person to take over permanently.
Removing an executor who has lost capacity
If a person has commenced acting as executor and subsequently loses capacity or concerns arise about their capacity, an application can be made to the Supreme Court to remove them as executor. As with passing over an executor, evidence will be required as to why the person is not suitable to act as executor. If the court is satisfied that the executor cannot perform their duties, it will appoint another person in the role.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.