The role of executors
Executors are crucial when it comes to managing a deceased’s estate. Executors are responsible for investigating the extent of the deceased’s estate; realising the same (including applying for Confirmation if necessary); settling all debts and liabilities due (including any inheritance tax) and thereafter distributing the estate in line with the deceased’s will (if there is one) and the law. Trustees also have similar duties and obligations when managing money or assets on behalf of trust beneficiaries. However, there may be circumstances where it becomes necessary to remove an executor or trustee from their position. It is sometimes possible to achieve this administratively if an executor or trustee is willing to resign voluntarily, but if not, it may be necessary to ask the court to order their removal.
In this article we examine the options available in Scotland for court-ordered removal of an executor or trustee from office.
The current law
Trusts (Scotland) Act 1921
In terms of Section 23 of the Trusts (Scotland) Act 1921, an interested party may apply to the Sheriff Court or the Court of Session for removal of an executor or trustee from office. However, this is only available in four limited circumstances, where the executor/trustee sought to be removed is:
- insane;
- incapable of acting by reason of physical or mental disability;
- absent from the UK continuously for a period of at least 6 months; or has
- disappeared for a period of at least 6 months.
It is up to the applicant to provide sufficient evidence to satisfy the court that removal is appropriate pursuant to one of these grounds. This can prove difficult, particularly in relation to grounds 1 and 2, when the applicant may not have access to medical records or other evidence in support of their case.
This option may be of limited use in practice and is unlikely to be helpful in the types of situations removal is normally desired. For example, where: an executor/trustee is refusing and/or delaying carrying out their duties; a dispute has arisen between relevant parties; or there is a “deadlock” situation between two or more executors/trustees.
Nobile Officium
Presently, the only other potential option for removal in Scotland is a petition to the Court of Session’s nobile officium (a Latin term meaning “noble office”). This wide-ranging equitable power allows the court to provide a remedy in situations where there is otherwise no legal provision or power covering the situation and it has historically been exercised in relation to the removal of executors/trustees in certain circumstances.
However, the court is only likely to grant removal if there has been serious “malversation of office” and the executor/trustee remaining in office would prevent, prejudice or obstruct the execution of the executry or trust. This is a very high bar to satisfy, and the court has held that removal will not be justifiable in cases where:
- there is a mere lack of co-operation between executors/trustees and mere absence of the conditions of harmonious working among them;
- there are minor potential conflicts of interest (the law supposes that the executor/trustee is able to reconcile their interest and their duty unless the contrary is proven);
- there has been negligence on the part of an executor/trustee, even if it results in some loss to the estate/trust; and
- there has been misappropriation of funds or property, even if it results in some loss to the estate/trust (although it depends on the extent and significance of the misappropriation).
As such, petitions for removal are seldom brought and even more rarely granted. However, the court has been willing to grant petitions for removal in appropriate circumstances, including when:
- the executor/trustee has obstinately refused to acknowledge their legal duty and to discharge their legal responsibility;
- there has been a complete “deadlock” situation, including where the party sought to be removed is being deliberately obstructive; and
- there has been an insurmountable conflict of interest
Potential changes to the law
The Trusts and Succession (Scotland) Bill is currently making its way through the legislative process in the Scottish Parliament. Its provisions have been the subject of much debate, but once finalised and enacted this legislation is likely to bring some welcome changes to the law in this area, including extending the potential grounds for removal. We shall provide updates on this as it progresses.
Risks
Given the challenges in securing court-ordered removal as well as the potential unintended consequences of removal, specialist legal advice should always be sought if removal is being considered. There may also be alternative remedies available to parties (whether that is a different type of court-ordered remedy, or alternative methods of dispute resolution such as mediation) which could lead to a swifter resolution and which it may be appropriate to consider first.
How can we help?
Our expert, cross-departmental Contentious Executries, Trusts and Tax team draws on the expertise of contentious and non-contentious specialists from across our firm and has a wealth of experience in this field.
We regularly advise clients in relation to removal of executors/trustees and have secured court-ordered removal in a number of recent cases on behalf of clients. We can also advise as to any alternative remedies that might assist in these situations, as well as in relation to alternative methods of dispute resolution such as mediation.
We also regularly advise clients in relation to the preparation of wills and creation of trusts, including in relation to selecting appropriate executors/trustees to prevent, insofar as possible, the need for removal in future.
For enquiries in relation to removal of executors/trustees or any other contentious executries, trusts or tax issues, please contact Stephanie Hepburn, Partner in our Dispute Resolution and Litigation team here; or alternatively, Thomas McFarlane, Associate in our Dispute Resolution and Litigation team here.
For non-contentious enquiries, including in relation to preparing a will or creating a trust, please contact a member of our Private Wealth and Tax team.