Learning Outcomes
After studying this article, you will be able to identify and explain the main administrative powers of personal representatives (PRs) in estate administration. You will understand the statutory sources of these powers, the scope and limits of asset management, the rules on delegation, and the fiduciary duties and standard of care required. You will also be able to apply these principles to SQE1-style scenarios and avoid common exam pitfalls.
SQE1 Syllabus
For SQE1, you are required to understand the administrative powers and duties of personal representatives in the context of estate administration. In your revision, focus on:
- the statutory sources of PRs’ powers (especially the Administration of Estates Act 1925 and Trustee Act 2000)
- the scope of PRs’ powers to collect, manage, invest, and distribute estate assets
- the rules on delegation of functions and appointment of agents, nominees, and custodians
- the fiduciary duties and standard of care required of PRs, including liability for breach
- the practical application of these powers and duties in administering estates, including the handling of complex or international assets
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- Which statute sets out the general administrative powers of personal representatives in England and Wales?
- Can a personal representative delegate investment decisions to a professional agent? If so, under what conditions?
- What is the standard of care required of a personal representative when managing estate assets?
- What is the difference between a personal representative’s power to appropriate and their power to advance capital?
Introduction
Personal representatives (PRs) are responsible for administering the estate of a deceased person. Their administrative powers are defined by statute and shaped by fiduciary duties. For SQE1, you must know the scope and limits of these powers, the statutory sources, and the standard of care required. This article covers the key administrative powers of PRs, including asset management, delegation, and distribution, and highlights the duties and liabilities that accompany these powers.
Statutory Sources of Administrative Powers
The main statutory sources for the administrative powers of PRs are the Administration of Estates Act 1925 (AEA 1925) and the Trustee Act 2000 (TA 2000). These statutes set out the framework for collecting, managing, investing, and distributing estate assets.
Key Term: personal representative A person appointed to administer the estate of a deceased individual, either as an executor (named in a will) or as an administrator (appointed under intestacy rules).
Powers to Collect and Manage Assets
PRs have broad powers to collect in and manage all assets of the estate. These powers are similar to those of an absolute owner, subject to statutory and fiduciary constraints.
Key Term: asset realisation The process by which PRs collect, sell, or otherwise convert estate assets into cash or other forms suitable for paying debts and distributing to beneficiaries.
PRs may decide whether to retain or sell assets, taking into account the interests of the estate and beneficiaries. They must also pay debts, taxes, and administration expenses before distributing the estate.
Investment Powers
PRs have the power to invest estate assets under the TA 2000, unless the will or trust instrument provides otherwise. They must consider the suitability of investments and the need for diversification.
Key Term: standard investment criteria The statutory requirements under TA 2000 s.4 that trustees (including PRs) must consider when making investment decisions: suitability and diversification.
PRs should review investments periodically and seek proper advice where appropriate (TA 2000 s.5).
Power to Continue a Business
If the estate includes a business, PRs may continue to run it temporarily if this is necessary for the proper administration of the estate. However, unless the will expressly authorises long-term continuation, PRs should aim to sell or wind up the business within a reasonable time.
Power to Appropriate and Advance
PRs may appropriate specific assets to a beneficiary in satisfaction of their entitlement, subject to statutory requirements and the need for consent from interested parties (AEA 1925 s.41).
Key Term: appropriation The allocation of a specific asset to a beneficiary in satisfaction of their entitlement under the will or intestacy.
PRs may also advance capital to a beneficiary before their interest vests, under TA 1925 s.32, if the trust instrument allows.
Key Term: advancement The payment or application of capital to or for the benefit of a beneficiary before their interest in the estate becomes absolute.
Key Term: maintenance The application of income for the maintenance, education, or benefit of a minor beneficiary, as permitted by TA 1925 s.31.
Delegation of Functions
PRs may delegate certain functions, especially investment management, to agents under TA 2000 s.11. They must exercise due diligence in selecting, appointing, and supervising agents. Delegation does not absolve PRs of ultimate responsibility.
Key Term: delegation The lawful appointment of an agent to perform certain functions on behalf of the PR, subject to statutory conditions and ongoing supervision.
PRs may also appoint nominees to hold assets or custodians to safeguard them (TA 2000 ss.16–20).
Worked Example 1.1
A PR is administering an estate that includes a large share portfolio. The PR has no investment experience. Can the PR delegate investment decisions to a stockbroker?
Answer: Yes, under TA 2000 s.11, the PR may delegate investment management to a professional agent, provided they select a suitable agent, give clear instructions, and review the agent’s performance regularly. The PR remains responsible for oversight.
Fiduciary Duties and Standard of Care
PRs are fiduciaries and must act in the best interests of the estate and all beneficiaries. They must avoid conflicts of interest and not profit from their position unless expressly authorised.
Key Term: fiduciary duty The obligation to act honestly, in good faith, and solely for the benefit of the estate and its beneficiaries.
PRs must act impartially between beneficiaries and keep accurate records.
Standard of Care
Under TA 2000 s.1, PRs must exercise such care and skill as is reasonable in the circumstances, taking into account any special knowledge or experience they have or claim to have.
Key Term: duty of care The statutory obligation to act with the care and skill that is reasonable in the circumstances, especially when managing or investing estate assets.
If a PR is a professional or claims special competence, a higher standard is expected.
Worked Example 1.2
A PR is a qualified accountant and is managing a complex estate. What standard of care is required?
Answer: The PR must exercise the care and skill that a reasonably prudent accountant would use in similar circumstances, reflecting their professional competence.
Liability for Breach
PRs may be personally liable for losses caused by breach of duty. Liability is joint and several if there are multiple PRs. However, the court may relieve a PR from liability if they acted honestly and reasonably (TA 1925 s.61).
Worked Example 1.3
Two PRs fail to review an agent’s performance, resulting in a significant loss to the estate. Are they liable?
Answer: Yes, both PRs may be personally liable for the loss due to failure to supervise the agent properly. The court may relieve them only if they acted honestly, reasonably, and ought fairly to be excused.
Exam Warning
PRs must not delegate discretionary or decision-making powers (such as the power to appropriate or distribute assets) unless expressly authorised. Delegation of such powers without authority is a breach of duty.
Revision Tip
Always check the will or trust instrument for express provisions that modify or exclude statutory powers or duties. Statutory powers apply only if not excluded or varied by the instrument.
Key Point Checklist
This article has covered the following key knowledge points:
- The main statutory sources of PRs’ administrative powers are the Administration of Estates Act 1925 and Trustee Act 2000.
- PRs have broad powers to collect, manage, invest, and distribute estate assets, subject to statutory and fiduciary duties.
- PRs may delegate certain functions to agents but must supervise them and remain ultimately responsible.
- PRs owe fiduciary duties and must act impartially, honestly, and in the best interests of all beneficiaries.
- The statutory duty of care requires PRs to act with reasonable care and skill, reflecting any special knowledge or experience.
- PRs may be personally liable for losses caused by breach of duty, but the court may grant relief in appropriate cases.
Key Terms and Concepts
- personal representative
- asset realisation
- standard investment criteria
- appropriation
- advancement
- maintenance
- delegation
- fiduciary duty
- duty of care
