Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s experts can help. Here, Robert James tackles the rights of a beneficiary in challenging the decision of an executor.
Q. My father-in-law passed away about 18 months ago. His material property was left in a discretionary trust, to be overseen by executors – one a land/estate agent also with family connections.
One of the property items is a bungalow which, according to the will, must be offered to my sister-in-law at market value.
The market value has been decided by the executor involved in estate agency, rather than, as the beneficiaries had requested, an average value from three independent estate agencies.
I would like to know if the executors are legally allowed to take this stance, rather than taking note of the beneficiaries’ wishes.
Would I/my wife be able to legally challenge the decision?
A. The starting point in considering a situation such as yours is the terms of the trust document, which sets out the respective powers and duties and is supplemented by legislation.
Without sight of the document itself, it is difficult to advise on specifics, but I set out some general advice below, which you should be able to apply to your situation.
See also: Browse the Business Clinic archive here
In basic terms, the trustees can act only within the terms of the trust document.
What I would not expect to see is the trust being very prescriptive in how they are supposed to achieve a particular outcome. In this case, the duty is to offer the property to your sister-in-law.
This then feeds into the question of whether the beneficiaries can dictate how a trustee is to do something. The short answer is no.
As long as the trustees act within the scope of their duties, how they do so is a matter for them.
One particular source of concern is the trustee has appointed their own business to determine the market valuation.
My concern is the agent may be in breach of their trustee duties, given the clear conflict of interest with their own private interests as an estate agent providing a valuation service, particularly if their business has gained financially.
From your question, I infer the source of the complaint is that the valuation methodology adopted is favourable to your sister-in-law (ie, the executor has valued it on the low side).
If so, you may be looking at a breach of trust on the basis of failing to act impartially between the beneficiaries.
This is particularly prevalent where a trustee’s decision may benefit one class of beneficiary over another.
That does not translate to a strict requirement to treat all the beneficiaries equally, but rather imposes a duty on the trustees to balance the interests of all beneficiaries.
A route to challenge would involve a breach of trust claim, where you would be asking the court to declare the decision made by the trustees void or to seek compensation for any loss suffered by the breach.
Alternatively, a disappointed beneficiary may have grounds to bring a claim under a different basis, including the Inheritance (Provision for Family and Dependants) Act 1975 or the doctrine of proprietary estoppel.
Do you have a question for the panel?
Outline your legal, tax, finance, insurance or farm management question in no more than 350 words and Farmers Weekly will put it to a member of the panel. Please give as much information as possible.
Send your enquiry to Business Clinic, Farmers Weekly, RBI, Quadrant House, The Quadrant, Sutton, Surrey SM2 5AS.
You can also email your question to email@example.com