Unwilling or missing beneficiaries – options open to personal representatives

Administering an estate can become particularly challenging when a residuary beneficiary refuses to cooperate, whether by failing to provide required information, disputing their entitlement, or not engaging with the personal representatives (PRs) at all. Without the necessary information to properly distribute the residuary estate, PRs may find themselves unable to complete the estate administration, resulting in a deadlock.

In England and Wales, one solution to this is provided under section 63 of the Trustee Act 1925, which enables PRs to pay the funds into court. This article sets out in what circumstances it's appropriate to use this option and the practical steps PRs must follow in order to do so.

Relief under section 63 of the Trustee Act 1925 

PRs can only pay a residuary beneficiary’s entitlement into court when they are genuinely unable to distribute the funds safely in any other way. 

The mechanism provided under section 63 is typically used where a beneficiary:

• cannot be located,
• has lost mental capacity,
• is in dispute with the estate,
• refuses to provide information necessary in order for distribution to be made, for example proof of identity, or
• otherwise prevents safe distribution of the funds to them.

It should be noted that payment into court should be treated as a method of last resort, to be used only after all other reasonable efforts to distribute the funds directly to the beneficiary have been exhausted. If it's found that an application to pay funds into court has been made without reasonable justification, the PRs may be held liable to pay the applicable costs.

Procedure for an application under section 63

Before making an application to pay a distribution in to court, the PRs should:

1. complete the estate administration as much as possible,
   
   
2. calculate the exact entitlement due to the beneficiary,
   
   
3. obtain and/or prepare documentary evidence relating to the estate including:
   
   1. estate accounts
   2. entitlement calculations
   3. attempts made to locate or communicate with the beneficiary, and
4. consider obtaining professional legal advice where a dispute is concerned.

Once the PRs have exhausted all other reasonable avenues and have been unable to distribute the funds safely to the beneficiary, they can make an application to pay the distribution into court under section 63 of the Trustee Act 1925. 

When making such an application, the PRs must file a witness statement or an affidavit setting out details of the trust and how it arose, the names and addresses of the uncooperative beneficiaries who are entitled to the funds, confirmation that the PRs/trustees agree to answer any inquiries made by the court relating to the application, and the trustee’s address for service.

If a payment is made into court, unless the court orders otherwise, the PRs must immediately serve notice on every person 'interested in or entitled to' the funds. This ensures transparency and gives beneficiaries the opportunity to apply for payment out of court as appropriate.

Section 63 therefore provides a statutory mechanism for PRs to pay estate money into court, which gives them protection from liability from claims by beneficiaries for failure to distribute funds, while facilitating conclusion of the administration of the estate. 

For further information, please contact our disputed wills team.