Tricky probate problems and how to solve them Part 1: A caveat has been entered but we need to administer the estate – what do we do?

This is the first in a series of short posts looking at tricky problems that can arise in probate disputes.

In this post, I will take a look at a common problem – what to do where a caveat has been lodged in order to prevent a grant of probate being taken, but there is some pressing issue that needs to be dealt with in the administration of the estate. It is often the case that issues may arise such as a need to sell property or to realise assets to pay tax and debts before the probate dispute is concluded.

Ordinarily, once a caveat has been lodged, a grant cannot be sealed until the caveat is removed – unless it expires without renewal or can be warned off, or is removed on a summons to the probate registry (more on this in another post), this will not happen until the contentious probate proceedings are concluded.

It should be borne in mind that the authority to administer the estate derives from the Will, not the grant, and there may well be steps that the executors can take, without the need for a grant, to preserve the estate. Nonetheless, there will be many cases where this is not a solution – where there is an intestacy, where there are two Wills in contention and different executors under each of them, or where there is, in addition to a contentious probate dispute, disagreement around the suitability of a named executor to take steps in the administration of the estate even on an interim basis.

Limited grants offer a solution in such circumstances to enable the estate to be administered, but not distributed, in the meantime.

There are two main options:

• Where proceedings have been issued – a grant pending suit under section 117 of the Senior Courts Act 1981 (“SCA”).
• Where proceedings have not yet been issued – a grant for the collection and preservation of assets known as a grant ad colligenda bona.

Administration pending suit

The court has discretion to appoint an administrator pending the determination of the probate proceedings under Section 117 of the Senior Court Act 1981. A grant under Section 117 is a limited grant that enables the estate to be administered in the interim and assets collected in, and tax and debts to be paid.

The leave of the court or the consent of the other parties will be required before distribution is made. However the administrator pending suit may, with permission, make a partial distribution of the estate e.g. if there are modest pecuniary legacies payable under whichever Will is admitted to probate.

Such an application will be made after contentious probate proceedings have been issued and should be made to the court dealing with the contentious probate proceedings (see PD 57, para. 8.1). It is quite common for such orders to be made at case management conferences.

If a professional is to be appointed, don’t forget to ask for an order permitting them to charge for their time. Section 117(3) of the SCA 1981 gives the court the discretion to allow such reasonable remuneration as it thinks fit from the deceased’s estate.

If the order is made, it is then necessary to apply to the Probate Department of the Principle Registry of the Family Division (“PRFD”) for the grant, as no grant can issue out of a district registry where contentious probate proceedings are pending.

One important point to note is that a limited grant under Section 117 will immediately expire once the probate proceedings are determined (whether by consent or following trial) and a new grant will then be required and will have to be applied for. It is sensible to plan for this to avoid a situation where there is a gap in continuity in the administration of the estate – particularly if there are pending transactions on the horizon.

Administration ad colligenda bona

Where contentious probate proceedings have not yet been issued, but delay in obtaining the grant is putting the preservation of the estate at risk, an application may be made to the district registry or PRFD for a limited grant of letters of administration ad colligenda bona.

This is a grant for the preservation of the estate and allows the administrator to call in the assets, pay the debts and tax and otherwise to hold the proceeds pending the resolution of the dispute.

Such a course of action may be considered in particular where there is an urgent need to sell estate assets e.g. leasehold property where service charge arrears are accruing, or where a property is mortgaged and in arrears, or there are pressing debts to be paid. I have also used this procedure where there is some physical threat to the building – in one case a risk of vandalism and, in another case, a Japanese Knot Weed infestation that needed to be brought under control.

An application may be made for an order directing that a grant of letters of administration ad colligenda bona be issued to any person who can show to the court that he has an interest in protecting the deceased’s estate. This may be the person entitled to the full grant or any other person showing good cause.

The grant ceases once the purpose for which it has been granted has been achieved (usually it will be expressed to have been granted “ for the purpose only of collecting and getting in and receiving the estate and doing such acts as may be necessary for the preservation of the same but no further or otherwise“) or when the full grant is issued, once the obstacles to the full grant have been resolved.

The application is made pursuant to rule 52 of the Non-Contentious Probate Rules 1987 and the grounds for the application must be set out in the supporting affidavit.

In very urgent cases or where the application is not controversial, the application may be made without notice. In other cases, notice should be given (see Ghafoor v Cliff [2007] 1 WLR 3022).

Who to appoint?

If the parties agree, it is possible that one of the solicitors acting in the litigation may be appointed. Where there is disagreement, the court will usually want to appoint someone unconnected with the dispute e.g. an independent solicitor. This can of course present difficulties – administering an estate where the beneficiaries are at loggerheads is something of a poisoned chalice and it may be difficult to find an independent solicitor willing to take the task on. Appointing a professional will also incur costs.

Consider carefully whether or not principle should give way to pragmatism and whether it might be better to agree that someone already connected with the case, and up to speed with the background, be appointed – e.g. appointing a representative from each side of the dispute, with an agreement as to who will lead on day to day issues and the other being appointed for the purposes of oversight.

Application for directions

Where someone has been appointed to administer the estate on an interim basis pursuant to a limited grant, it is possible that some contentious issue might nonetheless arise where the appointed PR can see that there will be trouble from one or other of the warring factions over a decision that needs to be taken. In such circumstances, as where a full grant has been obtained, an application can be made for the court to give directions to the PR as to how to proceed. This may be a source of comfort to any party that is being invited to agree to be the interim administrator of the estate.