Litigating with an Estate
This blog is a recap of April 29th eState Academy's Advanced Topic Webinar hosted by Jordan Atin and Ian Hull
To watch the recording the webinar click here.
For more educational material, join eState Academy for free here.
Authority to Sue and Defend
An estate can be sued if the Will has been probated and an executor has been appointed. Only an executor under a probated Will has authority before the court.
If there is no executor with probate to defend an action, a plaintiff can seek the appointment of someone to represent the estate. This individual is known as the litigation administrator.
Dealing with Creditors
An executor has a duty to seek out and pay legitimate creditors. This is usually done by advertising for creditors. This protects an executor from personal liability if a creditor appears after the estate has been fully distributed.
If an executor becomes aware of a potential claim, he or she should not distribute the estate until satisfied that it can be dealt with. Since a creditor generally has 2 years to bring a claim, this potential claim can hold up the distribution. Sections 44 and 45 of the Estates Act give the executor a special power. The executor can force a potential creditor to bring their claim. That way the estate is not at the mercy of a creditor waiting in the weeds. The executor can serve a Notice of Contestation on the potential plaintiff. The plaintiff then has a limited time to file a Statement of a Claim, failing which the claim is forever barred.
Claims Against a Beneficiary
If a beneficiary owes money to the estate, executors typically have a right of set off. This allows an estate to withhold the amount owing from the distribution to that beneficiary. This right applies even if the limitation period has expired on the debt owing pursuant to the Rule in Cherry v Boultbee.
Defending a claim where there are insufficient assets
An executor is deemed to acknowledge that the estate has assets to justify the judgment unless a special defence- plene administravit- is pleaded in the Statement of Defence. Unless properly pleaded, the executor will be personally liable to satisfy the claim and costs if the estate is insufficient to do so.
Executors defending or prosecuting a claim are generally entitled to indemnity from the estate for reasonable legal expenses when acting reasonably.
Thanks for reading, we hope you join us next week!