Missing or Uncooperative Beneficiaries: What are the Options for Personal Representatives?
Frequently personal representatives are faced with the problem of having to distribute the estate to missing or uncooperative beneficiaries. For a variety of different reasons, beneficiaries may refuse to either accept their share or sign a disclaimer. This article discusses three options available to personal representatives when faced with the problem of missing beneficiaries and two options when beneficiaries are unco-operative.
1. Missing Beneficiaries
Where the beneficiary in question cannot be located, the personal representatives have three options:
- Distributing to the known beneficiaries in return for an indemnity from them to reimburse personal representatives should the missing beneficiary come forward which may be worthless without tangible security;
- Personal representatives may insure against the missing beneficiary being traced (as in Re Evans, Evans v Westcombe  2 All ER 777). The insurance premium will be a legitimate expense of the administration and is recommended for the smaller estate; and
- Personal representatives can apply for an order pursuant to CPR r.64.2 (“a Benjamin Order”). A Benjamin Order (see Re Benjamin; Neville v Benjamin  1 Ch 723), enables the personal representatives to distribute the estate in accordance with the terms of the order. The court makes the order on the presumption that the beneficiary predeceased the deceased. Should it come to light that the missing beneficiary did not in fact predecease the deceased, he or his own personal representatives may pursue the other beneficiaries for his share and the personal representative will be shielded from personal liability by the Benjamin Order.
However, prior to embarking on the aforementioned options, it is advisable for personal representatives to make reasonable enquiries so as to demonstrate that the missing beneficiary is in fact missing. For example, personal representatives should consider placing an advertisement in a newspaper local to the missing beneficiaries last known residence, instructing a genealogist or a private investigator.
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2. Uncooperative Beneficiaries
Where the beneficiary in question is refusing to accept their share of the estate, the personal representatives have two options. Firstly, they can apply under CPR Part 64 for court directions, or secondly, they pay the share into court.
(i) Part 64 Directions
Many practitioners’ texts prefer Part 64 directions in preference to payments into court. However, in the author’s opinion where it is obvious what the court is likely to direct, the other beneficiaries will have a legitimate grievance that the personal representatives acted unreasonably by incurring the unnecessary expense of applying for directions, which can be costly.
(ii) Payment into Court
A personal representative can pay the beneficiary’s share into court. This has the equivalent effect to obtaining a valid receipt from a beneficiary. It is apparent from reading the leading practitioner’s texts that this option is regarded as exceptional. The main concern for any personal representative is the risk that the uncooperative beneficiary will seek reimbursement of the costs of the share being paid into court. However, the personal representative will only be liable if the decision to pay the share into court was ‘unreasonable’.
Where a beneficiary is resident outside of the United Kingdom and is absolutely entitled to the share a payment into court is reasonable. Further, a payment into court is justified where the personal representatives have genuine doubts as to whether the person in question is actually entitled to the share, or where the beneficiary is not sui juris or for any other reason the personal representative cannot otherwise get an effectual discharge.
The following are cases where the courts have found the personal representatives have acted unreasonably:
- In Re Elliot’s Trust (1873) LR 15 Eq 194, it was held that the trustee had acted unreasonably in making the payment in. In that case, the beneficiary had left England and travelled to Australia for 13 years and had not communicated with his family at all during that time. The beneficiary discovered the existence of his share and contacted his sister to inform her that he would return to take possession of it. On hearing this news the trustee contemplated paying the money into court. Prior to the trustee making the said payment in, the sister and a firm of solicitors contacted him stating that they were satisfied of the beneficiary’s identity and that the trustee should not make the payment in. The Vice-Chancellor held that, on the facts of the case, there was no excuse for having paid the money into court except a “restless anxiety to get rid of it”;
- In Re Metcalf (1864) 2 De GJ & S 122, the trustee refused to pay the beneficiary, who was a nun, her share on the basis that she was not entitled as a nun to own property. It was held that the trustee had acted unreasonably in paying the money into court as the fact the beneficiary was a nun was not a reason for not transferring her share to her; and
- In Re Cull’s Trusts (1875) LR 20 Eq 561, the trustee paid the beneficiary’s share into court on the basis that it was possible that the deceased may have exercised a power of appointment in respect of the share thereby disentitling the beneficiary. However, there was no evidence whatsoever of the power being exercised and the trustee had been informed by solicitors that the deceased had never employed solicitors and were willing to give a statutory declaration to the effect that no power of appointment had ever been exercised. In those circumstances, the payment in was held to be unreasonable.
The following are cases were the court has held that the personal representatives have acted reasonably:
- In Re Jones (1857) 3 Drew 679, the trustee had refused to pay over the share to the beneficiary’s husband, despite the husband having a power of attorney for his wife, on the basis that both the husband and wife were overseas and that the husband may have died, thereby discharging the power of attorney. The court held that despite the slight risk of the husband being dead the fact that the trustee could have taken a guarantee to cover himself from liability, he had not acted unreasonably;
- In Boyle v Collins  EWHC 271, Lewison J held at paragraph 56 that:
“In the case of some members, no address is known. However, three advertisements have been placed in local newspapers. In my judgment that amounted to the taking of adequate steps to ascertain the addresses of the members in question. The trustees will be entitled, under s.63 of the Trustee Act 1925, to pay into court such part of the fund as represents the entitlement of such members. I direct that they do so.”
Ultimately, the question for the court is whether personal representatives have acted ‘reasonably’ and this is necessarily a fact-specific question. The circumstances will usually dictate the most appropriate course of conduct for the personal representatives to take. It would appear that a missing beneficiary is a much more straightforward problem than an uncooperative one. In the latter situation, it is suggested that a payment into court may be the more ‘reasonable’ solution than simply seeking directions; however the personal representatives should be able to demonstrate that they have previously undertaken adequate steps in an attempt to resolve the situation.
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