Do I need Court approval to deal with a Claim?
If it is necessary for personal representatives to respond to proceedings issued against an estate or if they wish to pursue Court proceedings the wishes of the beneficiaries are important.
Personal representatives have an expectation that the legal costs they incur will be indemnified from the estate but this expectation must be balanced with the personal representatives’ duties to act in accordance with the interests of the beneficiaries.
The beneficiaries should be consulted and their agreement sought to the personal representatives having an indemnity for their legal costs from the estate.
If the beneficiaries do not all agree to this then the Court should be requested to give directions about how the personal representatives should proceed. An application of this type is known as a Beddoes application named for the case Re Beddoes in which this procedure was first used.
Unless directions are obtained from the Court to pursue or defend proceedings there is a risk that the personal representatives will have to bear the costs of the proceedings personally.
Where it is necessary to seek directions from the Court an application should be prepared that contains:-
- Details of the assets in the estate and the terms of the will (if any);
- Legal opinion on the merits of the personal representatives’ intended course of action in the substantive proceedings; and
- The value of the claim or, if not monetary, the significance of the proceedings for the administration of the estate; and
- The anticipated legal costs to be incurred in the proceedings by the personal representatives and the anticipated legal costs to be incurred by the other parties to the proceedings; and
- Any information that is known about the financial circumstances of the other parties to the (proposed) proceedings; and
- Any other relevant information.
The Beddoe application must be made separate to the proceedings to which it relates as it is an issue between the personal representatives and the beneficiaries. The legal opinion which forms part of the evidence in support of the application will be confidential.
If the personal representatives’ course of action is sanctioned by the Court any indemnity for legal costs from estate funds will only be effective so long as the personal representatives have given full and frank disclosure to the Court when making their application.
It is often appropriate to seek directions from the Court even where the personal representatives intend to take a neutral stance in response to claims issued against an estate. This is because it is the personal representatives’ duties to act in the beneficiaries’ interests may still require them to incur legal costs taking steps in the proceedings, for example providing documentation or evidence to assist the Court.