You have been appointed an executor under a will or as an administrator under an intestacy (where the deceased did not leave a valid will). Both of these roles can be known as the personal representative (PR). As a PR you have the responsibility of ensuring that the deceased’s estate is administered in the correct manner. This includes distributing the estate to the beneficiaries in accordance with the terms of the Will or the intestacy provisions. Being a PR can be a challenging and difficult job at times!
What is a beneficiary?
A beneficiary is anyone who receives a gift under a will or intestacy. It is usually the case that the beneficiaries will be close relatives and friends and easy to locate. However, that is not always the case. When preparing a will for someone, we would always recommend that they keep an up to date list of the full names and contact details of their beneficiaries to make the administration of the estate that little bit easier for their executors.
Steps to locate a missing beneficiary
So what if you do not have the contact details for a beneficiary, even after a thorough search of the deceased’s papers? What are the first steps you can take in trying to locate this beneficiary and protect yourself as PR?
- Statutory advertisements–Regardless of whether there is a missing beneficiary or not, we would recommend that the PRs place ‘statutory advertisements’. These are placed in the Law Gazette and a newspaper local to where the deceased lived. The purpose of these is to give any unknown claimant or beneficiary two months to make a claim on the estate. This only protects against claims from unknown creditors, so offers limited protection to the PRs, but might encourage the known beneficiary to come forward.
- Contact family and friends–In the first instance, the PRs should make enquiries of the deceased’s friends and family to see if they are able to provide any useful information. They may also find it useful to contact the General Register Office (GRO) which keeps an archive of births, adoptions, marriages, civil partnerships and death records in England and Wales. There is a fee for obtaining these records. If known, the PRs could also advertise in a newspaper local to the area where the beneficiary was last heard of.
- Instruct a genealogist–If the PRs’ enquiries prove unsuccessful, they could consider instructing a specialist genealogist who will make more detailed enquiries (searching through records, using family trees, searching through online archives etc.) There are a number of firms that offer this service. These companies may work on a fixed fee or contingency fee basis.
Protecting yourself if the beneficiary cannot be found
The PRs should make all reasonable efforts to locate the missing beneficiaries. So what should you do to protect yourself if you have made reasonable enquiries and the beneficiary still cannot be found? There are a number of other options:
- Keep a reserve fund–The PRs could hold the money that is due to the missing beneficiary back in case they do come forward in the 12 year limitation period. This might only be a practical solution for smaller estates and would mean the administration of the estate cannot be brought to a timely end.
- Obtain an indemnity from the known beneficiaries–The PRs can proceed to distribute the Estate to the known beneficiaries and obtain an agreement from those beneficiaries that they will reimburse the PRs if the missing beneficiary is later traced. This can be a good option if the Estate needs to be distributed quickly, but there is a risk that the beneficiaries will have spent the funds and be unable to reimburse the PRs against a future claim.
- Missing beneficiary indemnity insurance–Alternatively, the PRs could obtain missing beneficiary indemnity insurance. The value of the beneficiary’s entitlement would be paid out by the insurer in accordance with the terms of the insurance policy. An insurance policy has the added benefit of protecting the other beneficiaries as well as the PRs, and might prove to be the most cost-effective approach.
- Benjamin Order–The PRs could apply to the court for a Benjamin Order which is an order setting out that the Estate should be distributed in a certain way. When making the application, the Executors will need to set out the enquiries they have carried out, and the court might require that further investigations might be needed. A Benjamin Order will protect the PRs, but not the other beneficiaries who receive the assets. The PRs would need to consider whether the costs of this court application were proportional to the outstanding sum due to the missing beneficiary.
- Payment into court–The PRs can make a payment into court under section 63 of the Trustee Act 1925 and this will provide a good discharge for the PRs.
A PR can be held personally liable to the beneficiaries if the estate is not administered properly, so it is important that the PRs take legal advice and follow the proper steps where there is a missing beneficiary to ensure that their position is protected.
Charlotte Nelson is an associate in the private client team in the Putney office, and advises on a wide range of private client matters to include estate administration, wills, lasting powers of attorney and trust administration.