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The consequences of failing to administer a deceased’s estate

A recent High Court case provides a reminder as to the consequences of failing to administer a deceased’s estate. Ultimately, the executor can be removed by the court under s 21 of the Administration Act 1969 or under the court’s inherent jurisdiction to supervise the administration of trusts.

In Jensen v Jensen [2019] NZHC 329, the deceased had appointed her two surviving sons, Leslie and Peter, as joint executors of her estate.  The main asset was a residential property. The estate was required to repay a significant debt under a Crown Residential Care Loan Agreement.

After repaying the debt and meeting expenses, the estate was to be divided into three parts, with one part to be paid to Leslie, one part to Peter, and one part to be divided between the four children of a third son, Neil, who had already died.

Leslie was living in the residential property under an agreement made with the deceased prior to her death. He refused to vacate the property and to cooperate in the administration of the estate.

Peter applied to the High Court to have Leslie removed as an executor as well as for an order for vacant possession of the residential property.

The High Court reiterated the principles that apply to applications to remove an executor:

  1. the starting point is court’s duty to see the estate properly administered and trusts properly executed in the interests of the beneficiaries;

  2. the deceased’s wishes are a relevant consideration;

  3. the jurisdiction is discretionary, and its exercise depends heavily on the facts;

  4. it is not necessary to show proof of misconduct, breach of trust, dishonesty or unfitness; and

  5. hostility between executors is insufficient in and of itself. However, it may be relevant if the hostility prejudices the interests of the beneficiaries.

These principles are similar to those that apply in exercise of the court’s inherent jurisdiction, which is also guided primarily by the interests of the beneficiaries.

Having considered the evidence, the High Court was satisfied that Leslie’s continuation as an executor was preventing the administration of the estate and was detrimental to the interests of the beneficiaries, particularly given that the residential property was unkempt and uninsured.

It was not in the interests of the beneficiaries to deplete the estate by costs associated with the appointment of a professional trustee. Rather, Peter was permitted to continue as sole executor.

The High Court also found that Leslie occupied the property under a licence and therefore did not have the right to exclusive possession. Further, the deceased had not intended for the licence to continue after her death. An order for vacant possession was granted.

This case demonstrates the principles that the court will apply if asked to exercise its jurisdiction to remove an executor. The most important consideration is whether the continuation of the executor is prejudicial to the interests of the beneficiaries, for instance by preventing the due administration of the estate.