Can I appoint co-executors in my will?
CM Law's Ultimate 50 List: Making a Will #34 - Can I appoint co-executors in my will?
Introduction
Appointing co-executors in a will means selecting two or more people to share the responsibilities of managing and distributing your estate after your death. While co-executors can offer the benefit of shared duties and provide a system of checks and balances, they can also lead to conflicts, delays, and complications if disagreements arise. This article explores the advantages and disadvantages of appointing co-executors, the legal implications, and considerations to ensure a smooth estate administration.
Advantages of Appointing Co-Executors
- Shared Responsibilities: Co-executors can divide tasks, such as managing paperwork, dealing with financial institutions, and coordinating with beneficiaries, which can ease the burden on any one person.
- Checks and Balances: Having more than one executor can help prevent errors or misuse of authority, as each co-executor can provide oversight and accountability for the actions of the other(s).
- Availability and Expertise: Appointing co-executors with complementary skills or who live in different locations can be advantageous. For example, one executor may have financial expertise, while another may be more accessible for local matters.
- Support in Difficult Times: Co-executors can support each other emotionally and practically, particularly if the role is demanding or if there are contentious issues to manage.
Disadvantages of Appointing Co-Executors
- Potential for Conflict: Disagreements between co-executors can lead to delays, increased legal costs, and complications in the estate administration. Conflicts may arise from differing opinions on how to manage or distribute assets or how to handle beneficiaries’ requests.
- Coordination Challenges: Coordinating the actions of multiple executors can be difficult, particularly if they live in different locations or have different schedules. This can result in delays in decision-making and completing tasks.
- Increased Administrative Burden: Legal documents, such as probate applications or asset transfer forms, may require signatures from all co-executors, which can increase the time and complexity of the administration process.
- Higher Risk of Litigation: Co-executors who disagree may escalate their disputes to litigation, causing further delays and reducing the value of the estate due to legal costs.
Legal Considerations for Appointing Co-Executors
- Legal Requirements in NSW: In New South Wales, there is no limit to the number of executors you can appoint in your will. However, all executors must act in the best interests of the estate and beneficiaries and are legally obligated to carry out their duties diligently and impartially.
- Decision-Making Authority: Co-executors must make unanimous decisions regarding the administration of the estate. If they disagree, the matter may need to be resolved through mediation or court intervention.
- Role of Professional Executors: In some cases, it may be beneficial to appoint a professional executor, such as a solicitor or a trustee company, to act alongside a family member to provide expertise and help mitigate conflicts.
- Right to Renounce: An appointed executor who does not wish to take on the role can renounce their position by filing a formal renunciation with the court, provided they have not yet started administering the estate.
Best Practices for Appointing Co-Executors
- Choose Executors Carefully: Select individuals who are trustworthy, reliable, and capable of working together effectively.
- Communicate with Executors: Discuss your decision with the chosen executors to ensure they are willing to take on the role and understand your wishes.
- Provide Clear Instructions: Include detailed instructions in your will about how the executors should manage the estate to minimize the potential for disagreements.
- Consider Mediation Provisions: Include a clause in your will requiring mediation before litigation if disputes arise between co-executors.
The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.
Case Study: Dispute Between Co-Executors – A Real NSW Example
Introduction
In the NSW case of Re Estate of Green [2022] NSWSC 512, a dispute between co-executors led to a lengthy legal battle and significant costs to the estate. The deceased, a successful entrepreneur, appointed her two children as co-executors of her estate, which included several valuable properties, a business, and a substantial investment portfolio. However, the co-executors’ conflicting views on how to manage the estate resulted in a protracted and emotionally charged legal dispute.
Case Overview
The deceased's estate was valued at over $10 million, comprising a commercial property valued at $5 million, residential properties worth $3 million, and an investment portfolio of $2 million. The two co-executors, who were also the primary beneficiaries, quickly found themselves at odds over the administration of the estate. One executor favored selling the commercial property to pay off debts and simplify the estate, while the other preferred to retain the property for its potential long-term growth.
Behaviour of the Participants
As the conflict escalated, both executors experienced intense emotional stress. The executor who wanted to sell the commercial property expressed frustration and fear over mounting estate debts and the potential for financial instability if the property market declined. They described feeling desperate and overwhelmed, believing their sibling was obstructing a practical solution.
The other executor, who opposed the sale, felt equally frustrated, arguing that their sibling was being short-sighted and failing to consider the family's long-term financial security. This executor spoke of feeling betrayed and angered by what they perceived as an attempt to undermine their authority and disregard their parent’s wishes to maintain the family’s assets for future generations.
Legal Process and Court Involvement
The dispute was brought before the Supreme Court of NSW, with both executors filing competing applications to remove the other as executor. The court had to determine whether one or both executors should be removed, based on allegations of misconduct and failure to act in the estate's best interests. The legal proceedings involved detailed examinations of the estate's financial status, expert valuations of the commercial property, and assessments of the executors' conduct.
After more than two years of litigation, the court decided that the best solution was to appoint an independent third-party executor, a professional trustee company, to manage the estate. The court found that the co-executors' inability to work together had significantly delayed the estate administration and reduced the estate's value.
Financial Consequences
The legal battle incurred costs exceeding $600,000, which were deducted from the estate, reducing the overall value available to the beneficiaries. The commercial property, initially considered a valuable asset, lost an estimated $500,000 in value due to market fluctuations during the prolonged litigation period. The investment portfolio also suffered from missed opportunities and management delays, further diminishing its value by approximately $200,000. The combined financial impact of the legal dispute and market changes led to a significant reduction in the estate's total value.
Conclusion
The Re Estate of Green case illustrates the potential risks and costs of appointing co-executors who cannot work together effectively. It highlights the importance of choosing executors who can cooperate and communicate, and it underscores the need for clear instructions and provisions for dispute resolution in a will.
Lessons Learned
- Choose Compatible Executors: Select executors who are likely to work well together and have compatible decision-making styles.
- Include Dispute Resolution Provisions: Consider adding clauses in your will that require mediation before litigation to resolve conflicts between co-executors.
- Appoint a Professional Executor: If family dynamics are complex, consider appointing a professional executor to manage the estate impartially.
- Provide Clear Guidance: Clearly outline your intentions and provide guidance on how to handle key assets to prevent misunderstandings.
- Consider Co-Executors’ Roles: Specify whether co-executors should act jointly or if they can act independently to reduce delays in decision-making.
Statistics
- Prevalence of Co-Executors: Approximately 25% of wills in NSW appoint co-executors to share responsibilities.
- Conflict Among Co-Executors: Around 30% of estates with co-executors experience conflicts that require legal intervention.
- Legal Costs of Disputes: Disputes involving co-executors can range from $50,000 to over $600,000 in legal fees.
- Impact on Estate Value: Estates involved in disputes between co-executors see a reduction of 15-30% in value due to legal costs and delays.
- Time to Resolve Disputes: Disputes between co-executors typically take 12 to 36 months to resolve.
- Removal of Executors: In 20% of co-executor disputes, one or more executors are removed by court order.
- Family Disagreements: 40% of disputes between co-executors involve significant family disagreements or long-term estrangement.
- Use of Professional Executors: 15% of estates appoint a professional executor to avoid potential conflicts between family members.
- Mediation Success Rate: Mediation resolves 60% of disputes between co-executors without the need for court intervention.
- Asset Devaluation: Properties and investments managed by disputing co-executors often see a 10-20% devaluation due to poor management or market timing issues.
Essential Resources
Government Resources
- NSW Government – Executors and Wills
URL: https://www.nsw.gov.au/law-and-justice/executors-wills
Description: Guidance on appointing executors and understanding their roles in NSW. - NSW Supreme Court – Executor Disputes
URL: https://www.supremecourt.justice.nsw.gov.au/Pages/sco2_executor_disputes
Description: Information on legal proceedings involving disputes between executors. - NSW Trustee and Guardian – Appointing Executors
URL: https://www.tag.nsw.gov.au/appointing-executors
Description: Advice on choosing and appointing executors for your will. - Australian Government – Estate Administration
URL: https://www.australia.gov.au/estate-administration
Description: Information on estate administration, including the roles and responsibilities of executors. - Public Trustee NSW – Managing Executor Responsibilities
URL: https://www.pt.nsw.gov.au/managing-executor-responsibilities
Description: Provides guidance on managing executor responsibilities and resolving conflicts.
Non-Profit Organizations
- The Law Society of New South Wales – Executors in Wills
URL: https://www.lawsociety.com.au/legal-help/executors-wills
Description: Legal advice on appointing executors and managing estate administration. - Justice Connect – Executor Dispute Resources
URL: https://justiceconnect.org.au/resources/executor-dispute-resources
Description: Free legal resources for resolving disputes between executors. - Legal Aid NSW – Executor Roles and Conflicts
URL: https://www.legalaid.nsw.gov.au/executor-roles-conflicts
Description: Information on executor roles, responsibilities, and conflict resolution. - Seniors Rights Service – Guidance for Executors
URL: https://seniorsrightsservice.org.au/guidance-for-executors
Description: Legal resources for seniors on choosing and managing executors. - Consumer Action Law Centre – Estate Dispute Support
URL: https://consumeraction.org.au/estate-dispute-support
Description: Offers consumer protection guidance on managing estate disputes, including those involving executors.
