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Beneficiaries and special circumstances

A beneficiary of an estate is only permitted to bring an action on behalf of the estate (a derivative action) where special circumstances exist. In a long-running case, Mark Roberts, one of the beneficiaries under an estate, brought proceedings against two firms of solicitors that had acted for his brother, John Roberts, in his capacity as administrator of the estate. Mark claimed that he had suffered a loss due to the solicitors’ negligence.

The two brothers were beneficiaries under their grandmother’s Will. Her Will stated that if John paid the Inheritance Tax (IHT) due on her estate, he would inherit a farm and Mark would receive another property. Otherwise, the two properties would fall into the residue of the estate, to be divided between the two brothers and their aunt. When his grandmother died in 1995, John paid some of the IHT due and was granted the right to administer the estate. He transferred ownership of the farm to himself and the property was sold.

Of the sale proceeds, John received £285,000 and £20,000 was used to discharge estate liabilities. The remaining IHT due was not settled, however. John had appointed two firms of solicitors to advise him. In 2000, Mark had John replaced as administrator by his own solicitor and began proceedings against the two firms that had acted for his brother. He claimed that they were negligent in assisting him to breach the provisions of the Will by allowing the sale of the farm without settlement of all the IHT due, thus causing Mark to suffer a loss. The farm, which was the largest estate asset, should have fallen into the residuary estate.

In the event, there was insufficient money left to discharge the IHT due or to meet the pecuniary
legacies. The problem was that the solicitors owed a duty of care to the estate, not to Mark personally. He therefore sought to amend his claim to pursue it both personally and on behalf of the estate.

The Supreme Court held that Mark’s claim was time-barred and even if it were not there were no special circumstances that permitted him to continue the claim on behalf of the estate.  With any claim, it is important to get the law right and to be aware of the applicable time limits.

If you would like advice on any estate matter, please contact Alex Astley at Gullands by email: