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Scottish Executry: Businesses Appointing Executors and Executry Fees - Sheriff John Neil McCormick Judgment
The role of acting as an Executor to a deceased person's estate is a very important one. It involves winding up a estate according to specific legal duties, which are particular to the Executor themselves. This was recently confirmed in the judgment of Sheriff John Neil McCormick, where the Royal Bank of Scotland (RBS) and law firm Brodies received a warning from a Glasgow Sheriff for how they were conducting executry in Scotland.
The case in question related to the estate of a deceased individual from Greenock identified as 'KFC'. He had RBS draw up his Will, which appointed the bank and his wife as the Executors of his estate. Instead of carrying out their duties as Executors, RBS appointed five partners of Scottish commercial law firm Brodies LLP to wind up the estate via a Power of Attorney.
The issue in this important case was whether RBS (a corporate executor) could grant the solicitors Power of Attorney to carry out the functions that the bank owed as Executor of the KFC estate.
Sheriff McCormick's opinion in this case is an important one. Situations where banks become Executors of a Will, that they have previously drawn up, are not uncommon. Furthermore, these arrangements normally involve the Executor enjoying some financial payment from the value of the estate for the services that they have rendered. For example, in the case of KFC's estate, RBS's fees amounted to 4.5% of the value of the estate, while the law firm granted a Power of Attorney to wind up the estate were also charging thousands for their services.
While such charging is, unfortunately, not uncommon, Sheriff McCormick pointed out that parties that are Executors to an estate must treat their legal duties seriously and discharge the legal obligations imposed on them. Furthermore, he makes clear that he would take a very dim view of corporate executors, such as banks, who attempt to shirk their legal responsibility, simply to enjoy financial reward.
In deciding the case, Sheriff McCormick noted that there is only one instance where an Executor has the power to appoint an Attorney: when the Executor is living abroad and needs to ap-point an Attorney in Scotland to administer their affairs. Other than this, Sheriff McCormick could find no justifiable reason to extend this exception. In coming to that finding, the Sheriff set out some very important reasons why this was the case:
- The Executor has a legal responsibility to seek Confirmation from the courts before they are able to begin the process of administering a deceased's estate. Any extension of the ability of Executors to exercise their powers through a Power of Attorney, would in his view, be open to abuse; and,
- The legal duties that are attached to the office of Executor are personal to the holder of that office: an Executor is responsible for the organising of an estate, payment of debts and distributing the estate according to the terms of the Will. As such, any error in this must be the responsibility of the Executor, not any other party.
Ultimately, Sheriff McCormick was not provided with any justifiable reason to permit RBS to appoint Brodies LLP as its Attorney for the administration of the KFC estate. It was suggested that the decision of RBS to appoint Brodies LLP as its Attorney was for some reason of convenience, however Sheriff McCormick was not convinced of this: it was open to an Executor to appoint a solicitor without the need for a Power of Attorney.
Sheriff McCormick ultimately refused to grant Confirmation in respect of the KFC estate. He then went on to make three final comments regarding RBS's conduct:
- He pointed out that the process of applying for Confirmation in respect of the administration of a deceased's estate is well-settled, and fairly routine. Should RBS have wanted to depart from this process, it should have been brought to the court's attention at the earliest opportunity;
- The Sheriff then pointed out that it had received an application for Confirmation – that was refused - in circumstances remarkably similar to the case in dispute, demonstrating the potential for abuse present in the approach RBS had taken; and,
- Most crucial of all, Sheriff McCormick commented that he could see the possibility that to some Executors, the legal duties that are imposed on them in holding that office "...may have become an administrative inconvenience between death and fees", and that he would disapprove of this.
The full text of Sheriff McCormick's judgement is available here.
It is incredibly important that in drafting a Will and appointing an Executor, you are confident that your chosen Executor will take their responsibilities seriously. The office of Executor should be given to someone – whether a corporate body or an individual – that appreciates the significance of this role, and who can be trusted to carry out their duties with your wishes in mind. Furthermore, you must be assured that your Executor will not view the nature of their role as a burden.
At Wilson and Fish, we are experts on the law governing Wills and Executry services. Our team are regularly sought to advise on the drafting of Wills, and are often appointed to act as Executor for estates when individuals pass away. We take our role very seriously, and will never ask for a fee to be paid based on the value of your estate. It is our practice to operate on a competitive hourly rate or, where possible, to provide a fixed fee structure. We look to provide a service that meets our clients' needs: we understand that the prospect of drafting a Will can be a daunting one. Our expert team will listen to all of your concerns, and work in partnership with you to ensure that these are addressed to your satisfaction. If you have any questions regarding the drafting of a Will or the appointment of an Executor, please contact us today.
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