Money, they say, is the root of all evil. And this is what often happens when a family member has a role to play when it comes to devolving assets for a deceased estate when they have been appointed as executors.
Several court cases deal with misdeeds or conflicts of interest by family members of someone who has died and are then in a position of power when it comes to wrapping up the dead person’s estate.
In one, a gentleman called Ronnie died and appointed his life partner, Susanna, and his tax practitioner as co-executors. Ronnie’s son, Sean, and Susanna were set to inherit his estate in accordance with Ronnie’s will.
This is not illegal. Capital Legacy explained that it is possible for someone to both be a beneficiary and executor of a will and, in fact, there are times when this makes practical sense. It said that, however, when family or friends are appointed, a co-executor is also appointed. Appointing a professional also means there’s a safety net because, if they become incapable of doing their duties, should they, for example, also die, there will be a contingency plan in place as someone else from their business can take over.
Sean felt the estate was being mismanaged and, so, went to the Cape Town High Court asking that the executors be removed and the Master replace them. He argued that the two executors, especially Susanna, had a conflict of interest because she couldn’t be fair when she was set to benefit.
According to Sean, he had been trying for some time to get the relevant financial documents from the executors and hadn’t received them. He also told the court he had asked the Master of the High Court for assistance, without success.
The Master of the High Court is meant to ensure that the process is carried out according to the Administration of Deceased Estates Act and the will’s stipulations.
Detailed in the ruling is a key matter: a dispute between Sean and Susanna as to whether an AirBnB was part of Ronnie’s estate.
Susanna argued, with the tax practitioner supporting her, that Ronnie intended her to have the AirBnB so she could generate income and “cease her 30-year-long transcription services work which had become increasingly burdensome,” as the ruling said.
The rather lengthy court ruling concludes with granting Sean an order that Susanna and the tax practitioner are “hereby removed as executors of the deceased estate” and the Master had 30 days to appoint a new executor. As part of the ruling, the judge said that Susanna and the tax practitioner had to provide detailed documentation regarding their administration of the estate, including income and expenses, as well as assets.
Wayne Mostert, MD of ASI Wealth, explained that “the court found that Susanna, being both a beneficiary and executor, was in a position where her personal interests unduly influenced her ability to act impartially in administering the estate. This conflict of interest, coupled with concerns about transparency and documentation, contributed to her removal.”
What also concerned the court, said Mostert, was that “the tax practitioner aligned herself with Susanna,” which “undermined her objectivity and cast doubt on her ability to act in the best interests of all beneficiaries”.
As PM Attorneys explained in a blog, executors could “make decisions that personally benefit them”. Mostert said this had also been ASI’s experience.
The sad reality is that cases like these are not isolated, said Mostert. “Emotions run high during the winding up of estates, and appointing family members as executors often leads to tension, suspicion, or outright disputes, particularly where significant assets or families are involved,” he said.
PM Attorneys advised that executors who are beneficiaries should be cautious to maintain impartiality and fairness in estate administration. “Executors must act in good faith, following the instructions in the will and in accordance with South African law,” it said.
To mitigate such issues, the law firm advocates for the executor to be transparent, a viewpoint with which Mostert concurs. Or better yet, appoint an independent professional.
Independent executors are held to fiduciary standards and are legally obligated to act in the best interest of the estate, said Mostert. “They have systems in place, the necessary experience, and no emotional involvement, which allows them to carry out their duties objectively and in line with legal requirements,” he said.
Transparency is crucial in estate administration, noted Mostert. “It builds trust, reduces the likelihood of disputes, and ensures that beneficiaries feel respected and informed throughout what is often a very difficult time,” he said.
Mostert explained that estate planning is not just about writing a will: “It’s about putting the right structures in place to protect your legacy and ensure a smooth transfer of assets.”
Aspects that could lead to a conflict of interest:
- Disagreements among beneficiaries
Other beneficiaries might think the executor is making decisions in their own favour rather than equally considering everyone’s interests, which is especially common with larger estates.
2. Allegations of mismanagement or fraud
Claims of mismanagement or fraud can result in extended legal proceedings, to the detriment of all parties.
3. Lack of experience
Beneficiary executors may lack the experience needed for estate administration, potentially causing delays or legal issues due to mistakes.
Source: PM Attorneys
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