Administration of Estate
Administration of estate is the process whereby the personal representative collects in the assets of the estate and then meet the debts and liabilities and pay out the legacies and devices before distributing the residue, managing the estate as necessary in the meantime.
The funds in the estate must first be applied to meet debts and liabilities. The funeral expenses come first, and then the administration expenses and the debts of the deceased at his death. Debts arising after death and next, followed by any specific gift and then general gifts. Only after this can the residue be ascertained.
The personal representatives may be personally liable to those who surfer if they do not carry out the administration properly. There are however systems for them to protect themselves against the possibility of claims arising after they have distributed the estate.
To ascertain all the debts and liabilities, they must not only go through the deceased’s papers but also advertise for creditors in accordance with S27 of the Trustee Act 1925. If the personal representatives know of the existence of a beneficiary but cannot trace him, they may be able to seek a ‘Benjamin’ order enabling them to distribute the estate as though he had predeceased. In both cases the personal representatives are protected from personal liability should further claimants appear after the estate has been distributed.
The personal representatives have certain powers of administration and management of the estate under statue, but these are generally considered to be very inadequate and they are usually widened in any professionally-drawn Will. Where an estate arises after 1996 and includes land, however, the powers are much wider by virtue of the Trusts of Land and Appointment of Truetees Act 1996. Certain obligations to make complex calculations as between beneficiaries entitled in succession to each other, in order to preserve equality between them, are also commonly excluded in any case where they might arise.
Where a personal representative passes land, this may be done by written assent under S36 of the Administration of Estate Act 1925. A personal representative may also appropriate assets in satisfaction of gift under S41 of the AEA 1925, with certain limited obligations to obtain consents. The need to obtain those consents is often excluded by will.
The beneficiaries probably have no proprietary interest in the property in the estate, although they have the chose in action of the right to ensure due administration of the estate. A residuary beneficiary probably obtains an interest when the residue is ascertained, but not before. There is authority for saying that a specific beneficiary may obtain some from of equitable interest in the relevant property at death.
If the estate is insolvent and cannot even meet all its debts, they must be paid out in the order set out in S34(1) of the AEA 1925. Debts charged on specific property are covered separately by S35. S35(3) and Pt II, Sched1 of the AEA1925 set out the statutory order of application of assets to debts where the estate is solvent, though this statutory provision may be varied by the will. It is unclear whether this statutory order for the payment of debts may also be applied to the setting aside of a fund to meet pecuniary legacies when paying out for debts interacts with the provision under S33for the payment of pecuniary legacies on a partial intestacy.
A personal representative may be liable in devastavit or breach of trust for failing properly to administer the estate, but if he has acted in good faith and reasonable he may seek relief from the court under S61of the Trustee Act1925.
A beneficiary who has lost out because the estate has not been properly administered may go against the personal representatives. If however they are unable to satisfy him (because they do not have enough money) he may also have rights of action and in equity against the recipient of the property or may be able to trace the money or property which has been paid over. This may also apply to the subject of the Benjamin order who turns up later and cannot pursue the personal representatives.
Principles of Succession, Wills & Probate by CAROLINE SAWYER. Second Edition.
Equity And Trusts In Nigeria_2nd Edition by J.O. FABUNMI
Ahmad Alhaji Maina is a student of the Faculty of Law, Yobe state university, Damaturu, Nigeria.