Personal representatives and trustees in estate administrati...

Learning Outcomes

This article outlines beneficiary rights and remedies in estate administration and trust management, including:

• identifying the core fiduciary duties of personal representatives and trustees, and how these duties arise during collection, investment, and distribution of assets;
• explaining the main rights of beneficiaries to proper administration, information, accounts, and impartial treatment between competing interests;
• distinguishing personal from proprietary remedies for breach, and matching each type of claim to typical SQE1-style fact patterns;
• analyzing personal remedies such as equitable compensation, an account of profits, and surcharging or falsifying accounts where there has been devastavit or mismanagement;
• examining proprietary remedies and tracing, including constructive trusts, equitable charges, and the effect of a bona fide purchaser for value without notice;
• setting out when and how beneficiaries can seek court intervention, directions, injunctions, administration proceedings, and removal or substitution of PRs and trustees;
• summarising the statutory duty of care and investment duties under the Trustee Act 2000, and their practical impact on investment decisions and risk management;
• outlining protective steps available to personal representatives, including statutory advertisements, missing-beneficiary options, and Benjamin orders, and how these protect against personal liability;
• reinforcing exam technique by highlighting common traps, such as confusing rights during estate administration with rights under ongoing trusts, and overlooking limits on beneficiary control.

SQE1 Syllabus

For SQE1, you are required to understand the rights and remedies of beneficiaries in estate administration and trust management, with a focus on the following syllabus points:

• the fiduciary duties owed by personal representatives and trustees to beneficiaries
• the main rights of beneficiaries during estate administration and trust management
• the remedies available to beneficiaries, including compensation, tracing, and removal of fiduciaries
• the distinction between personal and proprietary claims
• the process for seeking court intervention and the limits of beneficiary control
• duties of care and investment (Trustee Act 2000 ss1, 3–5) applying to PRs and trustees
• protection of PRs: statutory advertisements (Trustee Act 1925 s27), missing beneficiary options, and Benjamin orders
• abatement of legacies and marshalling between beneficiaries where debts are paid
• removal and substitution of PRs and trustees (Administration of Justice Act 1985 s50; Trustee Act 1925 s41)

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.

1. What is the difference between a personal and a proprietary remedy for breach of trust?
2. Name two core fiduciary duties owed by personal representatives or trustees to beneficiaries.
3. What is the main right of a beneficiary if a trustee fails to keep proper accounts?
4. In what circumstances can a beneficiary seek to have a personal representative or trustee removed by the court?

Introduction

When a person dies, their estate must be collected, managed, and distributed by personal representatives (PRs)—either executors (if there is a will) or administrators (if there is not). Where assets are held on trust, trustees are responsible for managing those assets for the benefit of the beneficiaries. Both PRs and trustees owe strict fiduciary duties to beneficiaries. Beneficiaries, in turn, have important rights to ensure their interests are protected and can seek a range of remedies if those duties are breached.

The PRs’ overriding duty is to “collect and get in the real and personal estate of the deceased and administer it according to the law” (Administration of Estates Act 1925 s25). The Trustee Act 2000 applies to both trustees and PRs, imposing a statutory duty of care and modern investment duties. Beneficiaries do not own estate assets during administration; they have a chose in action to due administration and are entitled to enforce proper performance and to receive accounts of that performance.

Key Term: fiduciary duty
The obligation to act honestly, in good faith, and for the benefit of another, avoiding conflicts of interest and not profiting from the position.

Key Term: personal representative
The person (executor or administrator) responsible for administering a deceased person's estate.

Key Term: trustee
The person or persons holding legal title to trust property for the benefit of beneficiaries, subject to the terms of the trust.

Duties of Personal Representatives and Trustees

PRs and trustees are fiduciaries. This means they must act in good faith, for the benefit of the beneficiaries, and avoid conflicts of interest. Their main duties include:

• collecting and safeguarding estate or trust assets
• keeping accurate accounts and providing information to beneficiaries
• investing assets prudently and in accordance with statutory criteria
• distributing assets in accordance with the will, trust, or intestacy rules
• acting impartially between different classes of beneficiaries

The duty of care in the Trustee Act 2000 s1 requires PRs/trustees to act with reasonable care and skill, taking into account any special knowledge or experience, and higher standards where acting in a professional capacity. Investment powers are governed by the general power of investment (TA 2000 s3), the standard investment criteria (s4) and the duty to take proper advice (s5). These duties underpin decisions about managing and investing estate/trust funds and balancing the interests of, for example, life tenants and remaindermen.

PRs should progress administration within the “executor’s year” (typically 12 months from the grant) and then distribute, taking reasonable steps to preserve assets in the interim. They must pay debts and expenses, then legacies, before distributing residue. If PRs breach their duties, they may be personally liable, subject to any valid exoneration clause in the will and the court’s discretionary relief (Trustee Act 1925 s61) where they acted honestly and reasonably.

Key Term: executor’s year
The conventional period of one year from the grant within which PRs are expected to administer the estate and prepare for distribution; after this, beneficiaries may press for distribution or accounts.

Rights of Beneficiaries

Beneficiaries have several important rights to protect their interests during estate administration and trust management.

Right to Proper Administration

Beneficiaries are entitled to expect that PRs and trustees will administer the estate or trust lawfully, efficiently, and in accordance with the relevant instrument (will or trust deed) and the law. This includes paying creditors in the correct statutory order, observing abatement rules where assets are insufficient, and applying marshalling principles to ensure the appropriate class of beneficiaries bears the right burden if asset choices for payment of debts were incorrect.

Beneficiaries’ rights include appropriate distribution after debts and legacies are satisfied, and in the case of delay beyond the executor’s year, they can press for distribution and for interest on certain pecuniary legacies according to the applicable rules.

Right to Information and Accounts

Beneficiaries have a right to request and receive information about the administration of the estate or trust, including accounts and records. Trustees and PRs must keep proper records and provide them on reasonable request. Estate accounts typically include capital, income, and distribution accounts, with commentary outlining receipts, payments, and allocations. Residuary beneficiaries will usually be asked to approve the accounts and may give a formal discharge and indemnity to PRs—this does not absolve PRs of liability for negligence or breach but evidences closure.

Key Term: right to information
The entitlement of a beneficiary to request and receive relevant information and accounts about the administration of the estate or trust.

Right to Impartiality

Where there are multiple beneficiaries (e.g., life tenants and remaindermen), PRs and trustees must act impartially and not favour one beneficiary or class over another. Investment and distribution decisions should be made with due regard to the respective interests (e.g., income versus capital growth), applying statutory powers (TA 1925 ss31–32 and any amendments) and any express will/trust provisions to balance interests.

Right to Compel Performance

If PRs or trustees fail to perform their duties, beneficiaries can apply to the court to compel them to act, or to restrain them from acting improperly. This includes administration proceedings for accounts and inquiries, directions claims (often under the civil procedure rules governing trusts and estates), and interim relief (e.g., injunctions) to prevent misapplication or dissipation of assets.

Key Term: administration proceedings
Court proceedings designed to ensure proper conduct of estate/trust administration, often seeking accounts, inquiries, directions, or specific relief to compel or restrain fiduciaries.

Right to Seek Remedies for Breach

If a PR or trustee breaches their duties, beneficiaries have access to a range of remedies, including compensation, tracing, and, in serious cases, removal of the fiduciary. In addition, accounts can be “falsified” and the fiduciary “surcharged” to make good losses or unauthorised payments. Remedies are additional to court oversight and directions.

Remedies Available to Beneficiaries

If a PR or trustee breaches their duties, beneficiaries may seek the following remedies:

Personal Remedies

A personal remedy is a claim against the PR or trustee personally, usually for compensation (equitable compensation or an account of profits) for loss caused by the breach. PRs/trustees are liable for devastavit—loss caused by maladministration, including misappropriation of assets, failure to invest prudently, or failure to pay debts/legacies in the correct order—subject to any discretionary relief (TA 1925 s61) where appropriate.

Personal remedies include:

• equitable compensation measured by the loss flowing from breach (e.g., negligent investment causing avoidable loss)
• an account of profits where the fiduciary has made unauthorised gains
• orders to restore misapplied assets or their value to the estate/trust and surcharging accounts

Key Term: breach of trust
A failure by a trustee or PR to perform their duties or to comply with the terms of the trust or estate, resulting in loss or unauthorised profit.

Key Term: equitable compensation
A monetary award in equity to put beneficiaries in the position they would have been in but for breach, assessed with equitable principles rather than common-law remoteness rules.

Key Term: account of profits
An order requiring a fiduciary to disgorge unauthorised profits made by reason of their position, regardless of beneficiary loss.

Key Term: devastavit
Maladministration by a PR causing loss to the estate, for which the PR is personally liable.

Proprietary Remedies

A proprietary remedy allows the beneficiary to recover specific property or its traceable proceeds if trust or estate assets have been misapplied or misappropriated. Tracing follows value into substituted forms, and proprietary claims may yield:

• recovery of the specific asset (if still identifiable)
• a proportionate share or constructive trust over mixed assets
• an equitable charge over property where substitution/mixing prevents segregation

The proprietary claim is defeated against a bona fide purchaser for value without notice but otherwise persists through transfers.

Key Term: tracing
The process by which a beneficiary follows trust or estate property into its new form or hands, to recover it or its substitute.

Key Term: bona fide purchaser
A person who acquires legal title for value without notice of the equitable interest; proprietary claims cannot be enforced against such a purchaser.

Removal of PRs or Trustees

The court has power to remove a PR or trustee who is acting improperly, is incapable, or whose continued office would be detrimental to the interests of the beneficiaries. For PRs, the High Court may appoint a substitute or terminate an appointment under Administration of Justice Act 1985 s50. For trustees, appointment/removal may be effected under Trustee Act 1925 s41 or the court’s supervisory jurisdiction. The focus is the welfare of beneficiaries and the proper administration of the trust/estate; persistent failure to account, conflicts of interest, or serious mismanagement will justify removal.

Injunctions and Court Directions

Beneficiaries can seek injunctions to prevent threatened breaches or ask the court for directions on the administration of the estate or trust. Typical directions claims may request approval of a proposed course (e.g., sale of a significant asset), orders for accounts and inquiries, or “put up or shut up” case management directions to resolve disputes promptly. Interim relief may include freezing or proprietary injunctions to preserve assets pending determination.

Benjamin Orders

Where a beneficiary cannot be found, PRs may apply for a Benjamin order, allowing distribution without personal liability if the missing beneficiary later appears. Before seeking such an order, PRs should show that reasonable and thorough enquiries have been made. The order authorises distribution on an assumption (e.g., that the missing beneficiary predeceased), protects PRs from personal liability, but does not extinguish the missing beneficiary’s substantive rights against recipients.

Key Term: Benjamin order
A court order permitting PRs to distribute an estate as if a missing beneficiary had died, protecting the PRs from later claims.

PRs should also protect themselves against unknown creditors/beneficiaries by placing statutory advertisements (Trustee Act 1925 s27) in the London Gazette and appropriate local/trade papers, and conducting prudent searches (e.g., bankruptcy searches). If they advertise and wait the minimum notice period (at least two months), they may distribute without personal liability to unknown claimants; known claimants who cannot be traced should be handled by the missing beneficiary options outlined above (court payment, indemnity, insurance, or Benjamin order).

Limits on Beneficiary Control

Beneficiaries cannot generally direct PRs or trustees how to exercise their discretionary powers (unless all are of full age and capacity and absolutely entitled). However, they can compel proper administration and seek remedies for breach. In trusts of land, beneficiaries with interests in possession have statutory consultation and occupation rights (TLATA 1996 ss11–13) which may be modified or excluded by the instrument; their wishes inform but do not dictate trustees’ functions. In appropriate cases, beneficiaries who are all sui juris and absolutely entitled may terminate the trust under the rule in Saunders v Vautier, but this does not apply during ongoing estate administration prior to ascertainment and satisfaction of debts and legacies.

Key Term: account
A formal statement of the administration of the estate or trust, showing receipts, payments, and distributions, which beneficiaries are entitled to inspect.

Worked Examples

Worked Example 1.1

Scenario: A trustee invests all trust funds in a single speculative share without seeking advice. The shares collapse, causing a significant loss. What remedy is available to the beneficiaries?

Answer:
The beneficiaries may claim compensation for breach of trust, as the trustee failed to invest prudently and seek advice. The trustee may be personally liable for the loss.

Worked Example 1.2

Scenario: An executor sells estate property to a friend at a price well below market value, without informing the beneficiaries. What can the beneficiaries do?

Answer:
The beneficiaries may apply to the court for the executor's removal for breach of fiduciary duty, seek an account of the executor's dealings, and claim compensation for any loss suffered.

Worked Example 1.3

Scenario: A beneficiary suspects that trust funds have been misapplied and used to buy a car in the trustee's name. What proprietary remedy is available?

Answer:
The beneficiary may trace the misapplied funds into the car and claim a proportionate share of the car or a charge over it, depending on the circumstances.

Worked Example 1.4

Scenario: PRs know of a residuary beneficiary but cannot find them after extensive enquiries. Other beneficiaries are pressing for distribution. What protective steps should the PRs take?

Answer:
PRs should first ensure statutory advertisements under Trustee Act 1925 s27 have been placed to protect against unknown claimants. For the known but missing beneficiary, PRs can apply for a Benjamin order authorising distribution on an assumption (e.g., that the missing beneficiary predeceased), or pay the missing beneficiary’s share into court. An indemnity alone may be insufficient; insurance may be used, but only a Benjamin order or court payment fully protects PRs.

Worked Example 1.5

Scenario: A trustee pays trust money into a personal bank account and then uses part of the mixed fund to buy a painting. Can the beneficiaries assert a proprietary claim to the painting?

Answer:
Yes. Beneficiaries can trace into the mixed fund and claim either (a) a proportionate share of the painting reflecting the trust money’s contribution, or (b) an equitable charge over the painting to secure the trust sum misapplied, subject to the trustee’s choice of election in equity and the facts. The claim fails against a bona fide purchaser for value without notice.

Exam Warning

In the SQE1, you may be asked to distinguish between a personal claim (against the PR or trustee) and a proprietary claim (against specific property). Read the facts carefully to determine which remedy is appropriate. Consider whether the property or its proceeds remain identifiable and whether any third party is a bona fide purchaser for value without notice. Where removal is in issue, focus on beneficiary welfare and proper administration rather than fault alone.

Revision Tip

When answering SQE1 questions, always identify the type of breach, the loss suffered, and whether the beneficiary is seeking compensation, recovery of property, or removal of the fiduciary. Where the scenario suggests missing beneficiaries or unknown creditors, mention protective steps (TA 1925 s27 adverts, Benjamin orders, payment into court, or insurance) alongside substantive remedies.

Key Point Checklist

This article has covered the following key knowledge points:

• PRs and trustees owe fiduciary duties to beneficiaries, including loyalty, care, and impartiality.
• The Trustee Act 2000 applies to PRs and trustees; it sets a statutory duty of care and modern investment duties.
• Beneficiaries have rights to information, proper administration, and to seek remedies for breach.
• Remedies include personal claims (equitable compensation, accounts), proprietary claims (tracing), injunctions, and removal/substitution of fiduciaries.
• PRs can protect themselves via statutory advertisements (TA 1925 s27) and Benjamin orders; options also include paying funds into court and insurance.
• Abatement and marshalling affect how shortfalls and debt payments impact legacies and residue.
• Beneficiaries cannot generally direct fiduciaries but can compel proper administration and seek court intervention.

Key Terms and Concepts

• fiduciary duty
• personal representative
• trustee
• right to information
• breach of trust
• tracing
• Benjamin order
• account
• executor’s year
• equitable compensation
• account of profits
• devastavit
• bona fide purchaser
• administration proceedings