A recent ruling considered the extent of an executor’s duty to produce accounts to individuals other than the beneficiaries, against the backdrop of poor record-keeping during an estate administration.

In Howes v Howes [2021] EWHC 591, the court ordered the executor to produce accounts to an individual not directly benefitting from an estate. A Part 8 claim arose following a dispute between the claimant and the defendant (who were siblings) involving two estates.

One of the estates concerned was that of their late mother who died on 12 March 2021. The defendant was the sole executor. The other estate was that of their mother’s step-father who died on 23 June 2010. The mother and the defendant were executors, though in practice the defendant undertook all the estate administration.

Though separate estates, they were in fact linked in the sense that the mother’s estate included assets passed down from her step-father’s estate.

Mrs Howe, the claimant, was a beneficiary only of her mother’s estate but sought a complete account in respect of both estates. The defendant resisted producing accounts for the step-father’s estate on the basis that she had no interest in the estate.

The court found that he had apparently produced a careful and detailed account of his mother’s estate, but not in relation to the other estate. For instance, there was a lack of clarity around the payment and transfers of sale proceeds from a property and a subsequent property purchase. There was also an alleged shortfall of around £304,000 in the mother’s estate; there was a conflict between the parties as to their mother’s spending habits; and a real lack of clarity over how a legacy from the step-father’s estate had been spent.

The court took the view on the evidence that one possible explanation was that the defendant had appropriated significant sums for himself from the step-father’s estate which actually belonged to his mother. If so, then the mother’s estate could have a legal claim against him for reimbursement of any wrongfully appropriated sums.

Therefore, the claimant did have a sufficient interest in requiring that the defendant produce accounts of the step-father’s estate, and the court ordered the defendant to produce an account of it.

It’s notable that the judge observed his inability to even identify any point at which the defendant's administration of the step-father’s estate concluded; and it appeared he had continued to act in a fiduciary capacity.

Therefore the judge detailed how he expected the accounts to be produced, namely, it was to start from the beginning of the administration of the step-father’s estate, down to either when the proceeds of that estate were effectively reduced to zero – or to the administration of the mother’s estate (whichever was earlier).

Key takeaways

There are two key points to take from this ruling:

Where a third party – ie an individual or organisation that is not an estate beneficiary or personal representative – has a potential claim against that estate, they do have a sufficient interest to require an account of that estate.

Had the defendant maintained accurate record-keeping throughout the administration of both estates, the proceedings may never have become necessary. The case is an object lesson in why keeping accurate records is essential for producing accurate estate accounts – and the problems that can arise where there are failures.