What should Executors do when there are missing or unknown beneficiaries?
It can be very difficult for an executor to administer a Will correctly when there are missing or unresponsive beneficiaries. It is an Executor’s legal duty to distribute the Estate in accordance with the terms of the Will.
As the executor of an estate, it is your responsibility to trace the missing beneficiary. If you distribute the Estate without taking reasonable steps to search for the missing or unresponsive beneficiary, you could find yourself personally liable for the error. If you are not careful, this could be a very costly mistake!
What to do if you can’t find a beneficiary
As an executor, you must show that you have made reasonable efforts to try and locate the beneficiaries.
1. Instruct a genealogy firm
In a situation where someone dies without a Will, a good starting point to establish who the beneficiaries of the Estate are is to instruct genealogists to prepare a family tree.
This will indicate who the beneficiaries of the Estate are.
2. Place notices in the newspapers
If the beneficiary is known, then it is often a more straightforward and less expensive process to locate them. A notice should be placed in the local newspapers and where the beneficiary was last known to live.
3. Tracing agents
If an advert in the local newspaper is unsuccessful, a tracing agent would be able to assist with conducting the necessary investigation to locate a beneficiary. Their costs will vary depending on how much information on the beneficiary you are able to provide them.
4. How do you protect yourself?
If a beneficiary cannot be located, you can proceed with administering the estate; however, you should first take steps to ensure you are protected in case any missing beneficiary comes forward in the future to make a claim on the estate.
Alongside seeking legal advice, you have the following options to ensure that you are protected:
1. Obtaining an indemnity from the other beneficiaries
An indemnity from other beneficiaries would mean that they agree to pay the missing beneficiaries’ share to them should they later be discovered.
The downside of this is that whilst you have the other beneficiary’s agreement, you are still personally responsible as executor to settle this money and you are reliant upon the beneficiaries who signed the indemnity to reimburse you should the missing beneficiary come forward.
2. Obtaining missing beneficiary insurance from a specialist insurer
The Estate can be distributed and if the beneficiary is subsequently located, the insurance policy will pay their share. This provides the executor with a great deal of protection; however, it can be a costly option. Any costs for the premium would be paid by the estate and effectively deducted from the other beneficiaries’ entitlement.
3. Keeping a reserve fund to pay the missing beneficiaries’ share in the event that they emerge within the 12-year limitation period
This would only generally be feasible for smaller estates and would mean that your obligations would potentially continue for a number of years.
4. Applying to the Court for an Order to determine how the estate is to be distributed (known as a Benjamin Order)
The court will determine how the Will should be distributed. Distributing the estate in accordance with a court order will ensure that you, as the executor, are protected.
All these options should be considered by weighing up the value of the estate and the risk of a potential claim. Which option is taken would depend on the facts of the case; for example, in a very small estate, it may be inefficient and disproportionately costly to apply for a Court Order.
In essence, if you are dealing with an estate with missing or unknown beneficiaries – seek legal advice! The consequences of distributing without sufficient protection could be very costly for you. Please contact the Wills & Estates team should you wish to discuss this further.
