Areas of risk for trust and executry practitioners and some errors and omissions that have given rise to claims
Solicitors involved in will writing are faced with a particular dilemma when instructed to prepare a second (or subsequent) Will. It is well established law that a will dealing with the whole of a testator’s estate revokes by implication any prior will, and it is now common practice for solicitors to include routinely in any will a clause expressly revoking all prior wills. In Scott’s Judicial Factor v Johnston 1971 SLT (Notes) 41, it was held that where the later will was subsequently expressly revoked, the first will by implication revived, unless the testator had given express instructions for the first will to be destroyed – a decision which is well understood by lawyers, but as anyone who has tried to explain it to a lay-person, far from intuitive.
In order that an “old” will does not inadvertently “revive”, should will-writers, as a matter of practice, obtain express instructions from the client to destroy the old will (cf Cullen’s Ex v. Elphinstone 1948 SC 662)? Is it sufficient for this to be done in the body of the new will? Is it preferable for this to be done in a separate letter? Should the solicitor arrange for the client to destroy the earlier will himself, so ensuring its revocation (cf Bruce’s JF v. L Adv. 1969 SLT 337)?
Should the solicitor be circumspect in destroying the earlier will, where there is circumstantial evidence that the client may have been mentally unstable or even in the early stages of Alzheimers Disease when he gave instructions for the second will – where there is a risk that the later will could be reduced? And if the solicitor is doubtful about the testamentary capacity of the testator when he signed the second will, should he obtain a medical report on the patient? And if he does, how should he explain this to the patient? And who should bear the costs – the solicitor (because he is obtaining the report largely in the interests of self preservation), or the client (because the solicitor is obtaining the report in order to ensure that the will is valid)? Should the solicitor prepare a file note detailing the factors which gave rise to his concern? Good practice would suggest that a full file note should be made, but if he does prepare a file note, what should he do with it? After the death, should he send the file note and a copy of the prior will to the person who was disinherited under the second will? Or, in serving the client, should he merely take the client’s instructions, prepare the new will, and ensure that the client’s wishes are met by having the client himself destroy the prior will? And if the old will is retained, are you satisfied that your office systems are good enough to ensure that it is the new will (rather than the “revoked” will) which is sent out to the heirs after the death?
This is an area where the established law can create administrative confusion, and where law reform could bring the law into line with the lay person’s expectations.
Executry practitioners generally work in isolation, unlike our colleagues in most other areas of legal practice. It is all too easy to find that one’s position is being compromised. How far should one push things to ensure that an estate is administered properly? By trying to please an important client, can one become ensnared into doing something for which one could be disciplined for breach of the professional practice rules? Experienced executry practitioners will remember a variety of cases where they have faced up to a conflict of interest between their desire to please a client and their duty to see that the job is properly done:
- The client who insists that his wife’s estate
- is wound up without resolving her own children’s legal rights claims.
- The client who insists that you write to the children of the deceased with a cheque in satisfaction of their legal rights claims, without advising them that they should get independent legal advice before encashment.
- The client who insists on an “executor’s valuation” to ensure that the whole estate as disclosed in the Confirmation will pass to him in satisfaction of his prior rights.
- The client who as executor insists on putting himself in a position where a Court could hold that he was auctor in rem suam, as by transferring an agricultural tenancy to himself.
Is it sufficient protection for the executry practitioner if there is on file a letter to the client advising him of the legal position and the risks which he runs? Given that due to long negative prescription, it can be twenty years before many executry claims will surface, are we confident that our office systems will allow us to find the vital letters when the claim comes in?
Executry practice, be it largely routine administration, is still fraught with risk.
Eilidh M Scobbie, Solicitor, Burnett & Reid, 15 Golden Square, Aberdeen. Accredited by the Law Society of Scotland as a Specialist in Trust Law, Member of STEP.
The specific areas of risk which Eilidh Scobbie addresses appear to some extent peculiar to will drafting and executry administration respectively. These areas of risk present trust and executry practitioners with significant challenges in terms of minimising risk. In addition, as for solicitors involved in other areas of work, there is the potential for client dissatisfaction and claims to arise out of:
- Drafting errors
- Failure to follow instructions
- Delay and missed critical dates
- Failure to anticipate risks and protect the ‘client’
- Errors/omissions in examining and reporting on documentation
- Incorrect advice as to the law
- Fraud and dishonesty
- Loss of documents
Examples drawn from the Master Policy claims experience include:
- Drafting errors/omissions; Errors in execution of will
- Failure to provide for destination after liferent
- Beneficiary witnessed testator’s signature
- Failure to follow (error in implementation of) instructions
- Selling shares instead of transferring them to beneficiaries, or vice versa
- Failure to act on mandate by beneficiary or beneficiary’s trustee
- Error in interpretation or implementation of testamentary provisions
- Remitting funds to overseas beneficiary by inappropriate method
- Overpayment of beneficiary
- Delay and missed critical dates
- Delay/failure in actioning testator’s instructions for will/codicil
- Delay in selling executry investments
- Delay in lodging tax returns or arranging payment of Inheritance Tax
- Delay in drafting of A & M trust – prejudiced taxation treatment
- Errors/omissions in administration of executry estate
- Omission of assets/inadequate description of assets in Inventory
- Failure to secure/insure executry assets
- Failure to establish family tree reliably
- Overlooking nephews/nieces of the half blood
- Selling motor cars without regard to value of cherished number plates
- Distribution of estate without retaining sufficient for tax liabilities
- Loss of Documents
- Loss of principal will
- Loss of foreign bank draft
The number of intimations arising out of ‘Trust and Executry’ work has averaged 38 per annum over the course of the most recent 5 years’ experience of the Master Policy (the highest number in this period being 48 in 2000-2001 and the lowest being 31 in 1997-1998). Over this latest 5 year period, these intimations represent 5%
of the total number of Master Policy intimations (Claims and Circumstances’) from all types of work.
These intimations include instances of errors/omissions in addressing cross-border/foreign jurisdiction issues and cross-discipline issues that arise in will drafting and executry practice. By way of example, Claims and Circumstances have been intimated arising out of the following (alleged) errors/omissions:
- Cross-border/foreign issues
- Failure to establish/take account of testator’s domicile
- Dealing with Spanish property in Scottish will
- Appointing trustee company as sole executor of English will
- Cross-discipline issues
- Error/delay in serving notice in respect of Agricultural tenancy
- Failure to identify/address unevacuated survivorship destination
- Allowing a secure tenancy to be established.
As well as training sessions and other measures to ensure the appropriate level of awareness of these risks, checklists may be effective in ensuring that issues of domicile and jurisdiction are addressed properly as well as issues associated with title to and occupation of heritable property.
The information in this page is (a) intended to provide guidance on matters of practical risk management and not on issues of law, (b) necessarily of a generalised nature and (c) not intended to endorse or recommend any particular product or service. It is not specific to any practice or to any individual and should not be relied on as advice or as stating the correct legal position.
Alistair Sim is a Director in the Professional and Financial Risks Division at Marsh UK Limited