A Brief Discussion of the Judgment in Hoey
19 June 2014
A recent case in the Chancery Division of the High Court in Northern Ireland has highlighted the importance of having appropriate arrangements in place regarding the administration of one’s estate following death.
In Muckian & anor v Hoey & others  NICh 11 Mr Hoey, a wealthy man with an estate comprising fairly substantial business, agricultural and personal assets both in Northern Ireland and in the Republic of Ireland died in 2003 leaving no will. As he had made no will, his widow as next of kin was acting as the personal representative, having extracted a Grant of Letters of Administration. Some 10 years following his death, the administration of his estate had still not concluded, and two of Mrs Hoey’s daughters issued proceedings in the High Court pursuant to Article 35 of the Wills and Administration Proceedings (NI) Order 1994 seeking firstly to have their mother removed as the personal representative in the estate and secondly to appoint a substituted personal representative.
The court found that there had been a “pronounced delay” in Mrs Hoey’s administration of the estate following her husband’s death. Indeed, the appropriate inheritance tax account was only delivered to HMRC in 2009, more than 5 years following her husband’s death. The facts of the case also pointed to potential errors in the account and a forensic accountant had been appointed.
There was also evidence to suggest that Mrs Hoey had failed to keep appropriate administration accounts and had failed to account to the residuary beneficiaries for the income generated from the agricultural lands. She had transferred some of the estate assets to her sons, giving the sons of the family a farm each. It was submitted that she had “sold” these assets to the sons, but she had failed to gather in the proceeds of these sales. Essentially, according to Deeny J, the personal representative chose “to administer the estate in a way that seemed right to her, possibly...in accordance with her late husband’s instructions, but not... in accordance with law.”
The court found these to be sufficient grounds to remove Mrs Hoey as personal representative. A firm of solicitors were appointed to act as the administrator of the estate.
I would draw several lessons out of this judgment.
The judgment highlights the importance of considering during your lifetime who will have the responsibility of administering your estate following your death. If you do not make a will appointing an executor(s) then it will be necessary for someone to apply to the Probate Office to become the administrator of your estate, and this will normally be your next of kin. If you would prefer to have control over who should have this responsibility, it will be necessary to execute a will which appoints the persons of your choosing.
Also, who exactly is the most appropriate person (or people) to appoint? Married couples often choose to appoint each other as executor, in the event that one survives the other, and indeed this is perfectly advisable. However you may wish to consider appointing someone to act alongside the surviving spouse, perhaps to act as a support during what will undoubtedly be a difficult time for them. Some testators choose to appoint a professional person, often a solicitor, to act as executor, who will be able to guide the surviving spouse (or whoever else may be appointed) appropriately.
The duties of the executor of an estate are to account for the assets and liabilities in the estate, attend to the payment of debts, funeral expenses and inheritance tax (if applicable) and then distribute the remaining assets in accordance with the terms of the will. The executors will often instruct a solicitor to attend to these practical steps. However it is ultimately the executor(s) who must stand over the accuracy of inheritance tax account to HMRC and who must also swear an Oath to properly administer the estate according to law. Therefore, when considering executors, it is obviously important to appoint someone who you trust who you believe will be competent to carry out these duties.
When considering competency, it is worth noting that in his judgment, Deeny J stated that although Mrs Hoey was 74 years of age, “if it was just a question of age and health [he] would be satisfied that she could continue.” Clearly age is not necessarily a barrier to competency as an executor.Obviously a will does not come into effect until after death, which for the majority of people will be in later years, and therefore it is very common to have surviving spouses well into their 70s or 80s acting as executors of a will. This in itself should not cause any difficulty, as long as the executor feels able to take on the task and discharge their duties accordingly (and, of course, as long as they have the mental capacity to do so). However I would suggest to those considering making a will, or indeed updating their will, that it may be prudent to appoint someone of a younger generation, such as an adult child if appropriate, to act as executor at least in addition to a surviving spouse.
Finally, it is worth noting that one of the difficulties in this case centred around the fact that Mrs Hoey did not administer the estate in accordance with the law. As Mr Hoey had left no will, the estate fell to be distributed in accordance with the strict rules of intestacy, whereby the surviving spouse would take a set portion of the estate and the remainder would be divided between the surviving spouse and the children, according to the terms of the Administration of Estates Act (NI) 1955. Therefore I would emphasise that if you want to ensure that your estate is distributed according to your own wishes, it is important to express these wishes by executing a valid will.
Carson McDowell’s Private Client Team advise on all aspects of wills and administration of estates. Please contact Neil Bleakley or Fiona Wallace if you would like more information or would like to discuss anything raised in this article.