It is very important that executors and trustees (and those advising them) do not put themselves in a position where their own interests might conflict with those of the beneficiaries. This is the "no conflict rule". The rule covers not only the situation where there is an actual conflict, but it extends to the position where there is simply the possibility of conflict.
It is often difficult for those close to an estate to recognise the ways in which a conflict of interest can arise, particularly where the advisors have acted for the family for many years. Two common situations where conflicts can arise are where there is a breakdown in a relationship between the executors and trustees and the beneficiaries, and also where there is a breakdown of a relationship amongst the executors and trustees themselves. The executors and trustees must act unanimously. If they cannot agree it may be necessary to make an application to the Court to break the deadlock.
Another common conflict of interest situation for lawyers is where the validity of a will is challenged and the firm dealing with the administration of the estate is the same firm that prepared the will. Professional executors may also find themselves in a position where they have knowledge or other confidential information within the firm that is relevant to one side or other (or both).
The conflict may also not necessarily be actual to be a problem. If there is even only a perception of bias, whether or not that is the case, that can of itself make the process of the administration of the estate difficult if not impossible and may lead to a breakdown in relations.
One way of managing difficult relations as between executors can be to appoint a professional to deal with the administration of the estate. That person can keep all parties informed and retain impartiality. Alternatively, where more than one executor is appointed, not all of them need to act. One of the executors could renounce or refuse to take out the grant, or one executor could apply for the grant and the other executor could have power reserved.
It is often not apparent at an early stage that a conflict is on the horizon. It is important however to be alert to the possibility at the first sign of any differences between the parties. There is often a temptation for a well-meaning executor or person acting in the administration to try to resolve a developing dispute. However, the risk is that this could actually make the situation worse, and could even lead to one or other of the parties bringing a claim against the executor for breach of duty.
Where it appears that a dispute is in the offing, the safe option is to adopt an entirely neutral line, and to recommend that the other party takes independent advice in order to minimise the risk of a claim.
Ashfords' Disputed Wills, Trust and Estates team can provide specialist advice and assistance in relation to all trust and estate administration disputes. If you would like advice on an executor or trustee's rights and obligations, or indeed on any other trust or inheritance matter, please contact our Disputed Wills Trust and Estates team by telephone on +44(0) 1884 20 3086, or FREEPHONE on 0800 093 1336, or by email at firstname.lastname@example.org.