• February 28, 2024
 The Ombudsman’s Corner: December 2023

The Ombudsman’s Corner: December 2023

Our approach to dealing with matters arising from the administration of an estate

When we changed our Scheme Rules in April, one change that we made was to make it clear that we accept complaints from executors and beneficiaries of an estate. In this month’s blog, I want to set out our approach to dealing with these complaints, as it is relevant both to service providers dealing with estate administration, and conveying the sale of an estate property.

As a complaint is brought to us on behalf of the estate, when considering a suitable remedy, our first step is always to consider what remedy is due to the estate. Only after that do we consider whether an executor or a beneficiary of the estate is due any remedy.

Financial loss remedies

An example of financial loss is a delay in the service provider paying Stamp Duty owing on the sale of an estate property, leading to a late payment penalty from HMRC.

If we upheld the complaint, we would determine that the estate had suffered a financial loss here. And it is easy for us to work out what the remedy should be to put the estate back into the position it should be: we just need to know how much the penalty and interest was. The remedy would be the same both if the complainant was an executor of the estate or a beneficiary.

Costs based remedies

In general, if we find unnecessary charges have been made by a service provider, if they provided poor costs information, or charged excessively, we can direct a costs-based remedy. These include a reduction by a certain amount, reduction to a certain point or a reduction of a certain percentage. We may also direct a costs-based remedy if the service provider’s service devalued the service as a whole.

But does it differ in circumstances in which the complainant isn’t an executor of the estate, but a residuary beneficiary? The Law Society Guidance titled ‘How much detail must I give beneficiaries of an estate about costs?‘ states “It’s good practice for solicitors to provide residuary beneficiaries with relevant client care information at the outset, together with costs estimates and any later revisions. If unexpected expenses arise, the best possible information about them should be provided at the earliest opportunity.”

This means if the complainant was a residuary beneficiary rather than an executor, we would still find unreasonable service – as the firm had a responsibility to provide them with costs estimates and updates – and would likely direct the same remedy mentioned above.

But what would we do if the complainant was a legatee, receiving a specific legacy under the will, rather than being a residuary beneficiary? Can they even raise a complaint about costs?

Yes, they can – they are able to raise a complaint on behalf of the estate as beneficiaries of the estate. Our Scheme Rules make no distinction between residuary beneficiaries and other types of beneficiaries such as specific legatees. For someone to bring a complaint to us on behalf of an estate about a service the estate received, they simply need to be an executor or a beneficiary of the estate.

How would we approach a remedy in this situation?

Although the legatees are able to complain about a service provider’s costs, it is important to note that they are not going to benefit from a remedy awarded to the estate, as their legacy will remain the same. In these circumstances, we would speak to the complainant and ask them to check whether the residuary beneficiaries, but not other beneficiaries, have been given details of the cost of the administration.

Non-financial remedies

We can also direct that a service provider does something that should already have been done, or which needs to be done to correct a mistake.

This includes remedies such as directing a service provider to send the estate accounts to the complainants within a specified time or complete work relating to the estate, to give the beneficiaries some comfort and confidence that the administration will be finalised soon. If the service provider fails to do the work, the remedy will be enforceable to compel them to complete it.

Compensation for non-financial loss

We all know that service failures can cause a complainant distress and inconvenience – and in cases involving an estate, this is likely to come on top of the personal distress of losing a loved one. A payment as compensation of non-financial loss is a tangible recognition of the impact of unreasonable service.

It is important to note is that the estate itself cannot suffer from any of these things, but an executor or a beneficiary of an estate can.

I have explained when the remedy should go to the estate, but there are occasions where an executor or a beneficiary has suffered preventable upset. And in these situations we can direct an impact payment to them directly as an individual under our Scheme Rules.

For example, if the complainant was a beneficiary of the estate, and complained that the service provider acting as executor had delayed matters, as a beneficiary of the estate they may have suffered detriment and an impact payment may be due to them. We use the same approach as we would in any other case when deciding what a fair amount should be.

As ever, we are happy to provide further advice in relation to this or any other matter, please contact us at Technical.Advice@legalombudsman.org.uk. You can also find all our learning resources online at https://www.legalombudsman.org.uk/information-centre/learning-resources/

Jason Chapman